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Impact of 30% rental income tax on housing development in Kenya
Marty
#101 Posted : Friday, June 15, 2012 3:53:44 PM
Rank: Veteran

Joined: 3/31/2008
Posts: 761
Location: Nairobi
Wendz wrote:
kangi wrote:
Bachuma Gate wrote:


The land belongs to various kikuyu families, why tax them for their ancestral land.

Unless you are talking of allocated land which in the first place should allows revert to gova for re allocation and not for sale if the initial intended use was not achieved.

We really need to put serious thinking into these issues.



Land as a factor of production directly contributes to tax revenue generation. Idle land should be taxed as part of the govas opportunity cost. Holding land that would otherwise be housing a factory or coffee bushes for both employment and forex, is a serious drawback, then we expect the govt to build hospitals and roads.Hiyo pesa itatoka wapi?

Remember unemployment is when any of the factors of production including capital lies idle.


Let's start with defining "development". What constitutes development in terms of land? Assuming I put up a small mabati structure or a "septic" tank, and throw in some few planted trees or fruits or give the neighbor to cultivate sukumas, would i still be taxed? if i will not, what will stop me from holding land that i wont invest much in for speculation? I dont foresee selling my land now just because of taxation.... there's still a way round this development...... And with this, it is not evading tax, its avoiding tax, which is not illegal.


Interesting question. Development of the land would actually start with subdivision. If you check page of the mutation (for cap 300 land) it talks of development plan. However, I also think doing minimal stuff like planting trees is deveoping the land. I noted brookside have planted blue gums in their land as part of their 'development' of their expansive land along the eastern by-pass.

In other words, you may not necessarily even need to put up a structure to be deemed to develop the land....

On a more serious note..agricultural land needs to utilized for the same not to be deemed idle.
The land which is residential, then probably the expectation is the same that it is utilized for those purposes to be deemed developed. Whatever u develop may not be an issue unless of course the land is leased and in that case a lease is always accompanied with a set of special conditions that define how the development in it ought to be done...in liaison with the respective council...
When I admire the wonder of a sunset or the beauty
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itz
#102 Posted : Friday, June 15, 2012 4:10:53 PM
Rank: Member

Joined: 3/20/2009
Posts: 348
I wish people would be engaged with this kind of zeal and fervor on the issue of massive increase in size of government in kenya.The politicians will look for the easiest way out to raise revenue as they expand gvt and increase their perks while killing investments in much needed sectors like housing.Ever heard of the saying "if you want less of something, tax it" This is exactly what the gvt and the people of kenya will get.I have seen people like alma and alibaba defend this move but am sure they are looking at the people who have made a kill in real estate but in the aggregate of the whole population they are the few.So to come out with a punitive 30% tax to get a small majority u end up hurting the majority more because there will be less investment in real estate.
@architect.to suggest that the wealthy should be taxed mercilessly is quite absurd.you must have been a US democrat in another life.When you attack capital and the rich like that,they are smart and they look for places where their capital is treated better.In kenya we need more investment in housing for at least another 10 years to meet the demand.To say that u tax people with the most capital is just not wise.I always ask, has anyone ever been employed by a poor person.Please stop attacking the wealthy, think of a way to get yourself to that level instead.
maina20
#103 Posted : Friday, June 15, 2012 4:13:08 PM
Rank: Member

Joined: 7/21/2010
Posts: 249
Location: nairobi
Ali Baba wrote:
He he he!! Ati,a tenant like me be involved in landlord's tax evasion schemes??Are you trying to send me to Kamiti maximum because of a few shillings/month??That is the joke of this month.Someone evades taxes by himself/herself!!!

I guess major companies like Knight Frank and the rest which manage tenants will be easily managed by the tax man.if you count the number of tenants in CBD and other major cities/ town, then it will be a significant contribution to the taxman....
for tenants in West or eastlands, am sure they will build residential houses in the plots they hold in kitengela, kamulu,ruiru, etc since with bypasses it takes more less the same time to reach town from umoja or ruiru. I think more guys will buy property to build than to speculate.... for business in CBD,then no choice but to comply, and as usual...pass the cost to the consumer..
..desire to succeed is always fighting with fear of failure..
alma
#104 Posted : Friday, June 15, 2012 4:50:37 PM
Rank: Elder

Joined: 7/20/2007
Posts: 4,432
For those saying that I'm supporting the "new" tax all I can say is that you fall in the bracket of people we call tax evaders or otherwise those going against the law.

So if you've not been paying taxes on your rental property what you should do is go to church this weekend and thank your God coz if this was America, you'd be paying for all those years you illegally refused to pay your taxes.

So lets begin there.

To complain that taxing property owners is as good as a sin is where we shall disagree.

When I see Kenyans visiting America and they start staring at those roads, where the hell do you think the gov't got the money to build those roads? Facebook Ipo?

It was a system that collected taxes from all that were required to by law.

We are on this forum daily complaining about the quality of services from our gov't, kanjo etc...Where in God's name do you think they'll get the funding needed if everyone refuses to pay tax?

But I'm digressing.

I'm not for the figure of 30%, 10% or even 110%. Thats going to be the work of your elected leaders. Of course you will be too busy looking to see if his a jaruo or gikuyu to note that he has the power to change those figures.

Its about the need for a system that works for everyone.

We can't have walalos coming to this country and buying all the land in Eastleigh with pirate money and living free off the sweat of the watchie who's salary is cut to pay paye, nhif, etc.

If you are a landlord, and have never paid your rental tax, then you are as good as that walalo pirate you always complain about.

lipeni ushuru...We may yet build Konza with it.
Jose: If I make it through this thug life, I'll see you one day. The Lord is the only way to stop the hurt.
kangi
#105 Posted : Friday, June 15, 2012 6:25:28 PM
Rank: Member

Joined: 7/23/2009
Posts: 526
alma wrote:
For those saying that I'm supporting the "new" tax all I can say is that you fall in the bracket of people we call tax evaders or otherwise those going against the law.

So if you've not been paying taxes on your rental property what you should do is go to church this weekend and thank your God coz if this was America, you'd be paying for all those years you illegally refused to pay your taxes.

So lets begin there.

To complain that taxing property owners is as good as a sin is where we shall disagree.

When I see Kenyans visiting America and they start staring at those roads, where the hell do you think the gov't got the money to build those roads? Facebook Ipo?

It was a system that collected taxes from all that were required to by law.

We are on this forum daily complaining about the quality of services from our gov't, kanjo etc...Where in God's name do you think they'll get the funding needed if everyone refuses to pay tax?

But I'm digressing.

I'm not for the figure of 30%, 10% or even 110%. Thats going to be the work of your elected leaders. Of course you will be too busy looking to see if his a jaruo or gikuyu to note that he has the power to change those figures.

Its about the need for a system that works for everyone.

We can't have walalos coming to this country and buying all the land in Eastleigh with pirate money and living free off the sweat of the watchie who's salary is cut to pay paye, nhif, etc.

If you are a landlord, and have never paid your rental tax, then you are as good as that walalo pirate you always complain about.

lipeni ushuru...We may yet build Konza with it.

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Ali Baba
#106 Posted : Friday, June 15, 2012 6:52:39 PM
Rank: Member

Joined: 8/29/2008
Posts: 573
ITZ: You are wrong when you allege that I'm looking at people who have made a killing in this field.For your info,I'm a landlord and I always paid my taxes on rental income.There is no new tax like you state...only a whole bunch of tax evaders.And I'm only encouraging compliance of tax payments.Let's pay our taxes and build our country.Who do you expect the govt to tax to raise funds to finance security,roads,education etc???? Tulipe ushuru tunjenge Kenya.
itz
#107 Posted : Friday, June 15, 2012 9:45:38 PM
Rank: Member

Joined: 3/20/2009
Posts: 348
@Alibaba.kenya is among the most taxed country in the world.you talk of the US, the US does not have 16% VAT.In kenya you have income tax,VAT,almost prohibitive cost of doing business etc.Why dont you try look at the other side of the equation and see what all this new taxes are being used for.They are mostly for expanding the govt.All i can say is that we are heading the european way because no one is questioning the gvt.all these tax professionals this week during the budget process all want increase of taxes on capital that is used to expand business and investments.
In the US you can itemize your deductions and end up paying lower taxes which is the way i believe kenya should be.
As i said this will hurt the common mwananchi more than those rich people that keep getting mentioned here.
Ali Baba
#108 Posted : Saturday, June 16, 2012 2:21:33 AM
Rank: Member

Joined: 8/29/2008
Posts: 573
ITZ:Even in kenya you itemize.Please familiarize yourself with Income tax Act cap 470.In any case,rental income tax is not new.I don't know why we are arguing over this.Compliance is necessary to prevent kenya going the Greece way!!The bigger the govt,the more the revenue is required.Come on,pay your taxes and I pay mine and we will not go the Greece way.Talking of US and lack of VAT,what a hypocrisy! USA needs VAT more than any other country in the world.Their deficit is frightening.Is that what you want?? Pay up,rental income was taxable even in 1963.>>>Check Cap 470.
jaggernaut
#109 Posted : Saturday, June 16, 2012 9:40:31 AM
Rank: Elder

Joined: 10/9/2008
Posts: 5,389
sanity wrote:
A tax on rental property is fine..however at 30%?? thats way too high.in other words for every 100bob 1 get from my shackle the gava takes 30%??thats pure theft!


But the govt has been taking 30% of the gross income of all employees in the formal sector. Why should a civil servant earning 30k gross pay 30% tax but a landlord earning a gross income of 600k pm not pay tax? And you call that theft. Its sad that the burden of taxation and thus funding the govt has so far been borne by lowly paid employees in the formal sector. That needs to change.
XSK
#110 Posted : Saturday, June 16, 2012 10:42:10 AM
Rank: Veteran

Joined: 12/8/2009
Posts: 975
Location: Nairobi
jaggernaut wrote:
sanity wrote:
A tax on rental property is fine..however at 30%?? thats way too high.in other words for every 100bob 1 get from my shackle the gava takes 30%??thats pure theft!


But the govt has been taking 30% of the gross income of all employees in the formal sector. Why should a civil servant earning 30k gross pay 30% tax but a landlord earning a gross income of 600k pm not pay tax? And you call that theft. Its sad that the burden of taxation and thus funding the govt has so far been borne by lowly paid employees in the formal sector. That needs to change.



@jaggernaut

Ati 30 k the tax is 30 %?


Shame on you
You will know that you have arrived when money and time are not mutually exclusive "events" in you life!
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