To pay or not to pay land rates is the dilemma the courts have been asked to resolve following two past conflicting decisions on whether such money is payable to county governments by State parastatals.
A High Court in Mombasa had in July last year found that Kenya Airports Authority should not pay Sh43 million to the Kwale County Government, in respect of Ukunda Airstrip and aerodrome.
However, a High Court in Nairobi in 2014 allowed the defunct City Council of Nairobi, currently Nairobi County Government, to attach the property belonging to the Kenya Broadcasting Corporation (KBC), unless Sh254 million which had been the outstanding land rates since 2012, was settled.
While relying on the strength of the Mombasa case, the public broadcaster has requested the High Court to consider barring Nairobi from demanding the millions, in relation to its lands, saying it is equally protected under the law.
Mr Justice Joseph Sergon in a ruling delivered last month, agreed that KBC had raised important issues which warrant determination by the court.
He also granted orders stopping the county from attaching the public broadcaster’s assets until the matter is resolved.
“It is clear in my mind that the question as to whether or not KBC can be categorised as an ordinary rate payer or should be treated differently is an issue which merits further interrogation in a substantive way during the hearing of the suit.
In the circumstances, KBC is entitled to an interim protection awaiting determination of the suit,” Mr Justice Sergon ruled.
According to the public broadcaster, the threat it faces from Nairobi may ground its operations and it is the reason why Parliament enacted the KBC Act which declares that the land occupied by the broadcaster is a protected area.
Further, that the land belongs to the government of Kenya and that the services rendered are fundamental, educational and free in nature on behalf of the national government and that Nairobi City County itself is a beneficiary of these services.
“If Nairobi City County strongly feels that it is entitled to any rates, then it should demand the same from the national government through the parent ministry of Information and Communications, because we are a public broadcaster and a trustee of the government,” says KBC in court papers.
In the Mombasa matter, Mr Justice Anyara Emukule ruled that the demand notice by Kwale County Government for rates of Sh43,221,310 was illegal.
The judge said that primarily, the national government functions and provides services through ministries or departments of government for its core services.
“These agencies offer vital services, which parent ministries or departments would ordinarily provide or render. Consequently, these agencies enjoy the same or similar privileges as the national government would itself enjoy,” Mr Justice Emukule said.
KAA relied on its semi-governmental structure and functions for non-liability to payment of rates.
The judge said that though Article 209(3) of the constitution empowers a county government to impose rates upon any rateable owner as defined in the Rating Act and the Valuation for Rating Act, Article 209(5) qualifies that power to the extent that the imposition of taxes such as rates, does not prejudice the national government’s economic policies or economic activities.
Nairobi County recently claimed that the national government owes it approximately Sh69 billion in rates and arrears, which could have been used to hire doctors and nurses, repair county roads, ease traffic congestion and establish markets for small-scale traders.
It remains to be seen how the courts will handle the matter either allowing State firms to pay rates to county governments or otherwise.