NAIROBI, Kenya, Jun 18 – The Consumer Federation of Kenya (Cofek) has Finance Minister Njeru Githae’s directive for all landlords to pay tax as ‘unworkable.’
Secretary General Stephen Mutoro told Capital FM News that the timing was wrong especially due to the high inflation and the Finance Minister was not justified in making the move.
He said although the order to the Kenya Revenue Authority by Githae during his budget speech last Thursday seemed innocent, it would be a harsh one if implemented.
“The reason is that landlords are in business… so when you impose tax on a landlord, it causes a lot of reprisal effect and one is that of course rent is going to go up by a minimum of that margin,” Mutoro stated.
He said the consumer federation could petition Parliament and the Judiciary to resist this proposal.
“And who is a landlord anyway? because we are looking at the landlords in terms of people who are in the informal settlements for example and some kind of landlords who own a lot of properties in different names,” he said.
“So I see a case in which their disclosures is going to be a real problem and I do not see KRA’s (Kenya Revenue Authority) capacity to make sure that they can identify property owners to pay the tax,” he added.
Mutoro expressed fears that establishing ownership of some of this property could also prove difficult.
“There are people who for example pay rent to agents who are agents of agents. So if you look at the whole line about ownership, I see a challenge where some people are not going to declare their property or there will be cases where landlords devalue the rent to KRA,” he said
Githae, in his budget speech last week, said taxation on landlords would ensure fairness and allow this class of citizens to contribute towards nation building.
“Over the recent past many patriotic Kenyans have invested heavily in real estate thereby promoting access to housing of our people… The Kenya Revenue Authority will shortly embark on mapping out all residential and commercial areas and implement comprehensive strategy to ensure that all landlords are effectively brought into the tax net and all rental income taxes due are paid,” he told Parliament.
Central Organisation of Trade Unions (COTU) Secretary General Francis Atwoli took issue with the taxation of landlords saying it would eventually affect the tenants.
“We are not opposed to remittance of tax but landlords are paying land rates to the respective local authorities for development and if you talk of more taxation, they will pass it over to tenants, majority of who are earning very little money and are already tax compliant,” he said.
Atwoli said he no longer had faith in the Kenyan budget.
“You can say it was a good budget but after three months you find different things. They don’t respect what they say in Parliament,” he asserted.