Hon. Mwicigi (Former Assistant minister for Agriculture) & Kimotho family (Sisters) in Boston Region.

There are three possible justifications for some form of land tax in Kenya. First, given the strong evidence that small holdings are in general much more intensively utilized than larger holdings since they have both a higher output and a higher rate of employment per hectare, then a suitable land tax is one method of encouraging either the more intensive use of land by existing farmers or the sale of land to other people, which should also lead to an intensified use of the land. Thus the basic objective in this case is increased income generation and employment creation.

Secondly, one can argue that a suitable land tax is a possible method of obtaining a more equitable distribution of land, and hence a more equitable distribution of income.

Thirdly, owing to increased population pressure in rural areas, Kenya is entering a phase in which land values are expected to rise rapidly. There is a considerable circumstantial evidence that many people are purchasing land for speculative purposes and are not unduly concerned about its short-term productivity. The attractiveness of land speculation is enhanced by the absence of any form of capital gains tax in Kenya. Thus some form of land tax might be devised as a wealth tax or capital gains tax.

In terms of a tax rate to apply specifically to land, it is probably most realistic to concentrate on the first objective. There are already fiscal instruments that should, in theory at least, cope with the second objective, for example progressive income tax. If we are concerned with the third objective, we should make a case for a general wealth tax or capital gains tax and not relate it specifically to land.

The general problem, then, is to design a tax that will intensify the use of the land and so increase incomes and create employment. If it also achieves some measure of equality of income and wealth, then those will be desir¬able side effects. However, there are many specific problems that would have to be resolved before a precise form of tax could be proposed. Some of these are discussed briefly below

The opposition on the other hand must be also commended that they have continued to meet in private outside the glare of the one has to take into account such factors as soil type and slope drainage. Thus the full implementation of the tax would have to await a detailed survey of farms based on some appropriate criteria for assessing the productive potential of land. There are weaker alter¬natives that could be proposed.

For instance, a tax could be based on expected annual rainfall on, say, a sub-locational basis, with the rate of tax at a level that took account of the variable productivity of land, even within a common rainfall zone. It would still be desirable, however, to have rainfall measured at some points than is the case in present.

One problem of introducing a country-wide land tax would be the ad-ministrative problem of collection. Several methods of reducing this burden may be put forward. The first would be to exempt land below some limit of productive potential; all sub-locations with an expected rainfall of below 750 or 850 mm, for example, might be exempted.

These limits would immediately eliminate at least 80 per cent of Ke¬nya’s land area. Within the remaining area, one might then exempt holdings below a certain size. Thus, of the 680,000 holdings in these districts where registration had been completed by the end of 1970, only 340,000, or half, would be liable for a land tax if holdings under 2 hectares in size were exempted. One particular problem hindering the introduction of a land tax is the fact that legal ownership estab¬lished though land registration exists at present for only about half the high-potential land.

A land tax would have to be introduced on a selective basis in the short run, but this would not raise insuperable problems of equity. One solution would be initially to introduce the land tax only on farms exceeding, say, 10 or 20 hectares in size. A cut-off point of this sort would avoid discouraging the mass of farmers from the adjudication of land in areas as yet unregistered.

Although farmers with holdings of more than 20 hectares in areas not yet adjudicated would be treated favourably compared with others paying the land tax, it could be argued that they had already suffered by the very fact of not having legal title to their land. An arrangement of this sort is probably, therefore, the best way to introduce the tax in the early stages.

A rate of tax has to be chosen that would make it unprofitable to retain idle or land farmed at a level well below its productive potential but ca¬pable of yielding an adequate return to a person farming it at a level ap¬proaching its potential. This suggests that the tax must be related to the productive potential of land. Unfortunately, the productive potential of land is a nebulous concept and notoriously difficult to measure. At a regional level it can be measured roughly in terms of rainfall, ecologi¬cal zone, etc. for precise measurement in relation to an individual farm, health, community development and agricultural extension services.

Kenya needs to embark on a long-term and fundamental reconstruction of its whole agricultural system.