Nations of Eastern Africa

American Journal of Economics and Sociology, The, Dec, 2000 by Rexford A. Ahene

REXFORD A. AHENE [*]

THE HISTORY OF land taxation in east Africa reveals a chronology of incremental adjustments to European settlements in the region since the beginning of the century. The process can be divided into two broad phases. The first phase was a period of increasing European homesteading induced by colonial economic aspirations, and its accompanying need to define policies for land resource management. The second phase began with the attainment of independence in the 1960s. For most African states, this was an era of budget deficits, as governments consistently spent much more that they were able to raise from domestic sources despite their high levels of taxation. [1]

In addition to the common British colonial heritage shared by the countries included in this survey, a wide variety of obstacles has stymied the attempt to tax real property. First, pre-colonial East Africa was characterized by the complete absence of urban settlements; few areas in Africa had such complete dispersal of population. Cities such as Nairobi, Entebbe, Kampala, Lusaka, Blantyre, Harrare, and Dar es Salaam were started by European and Arab settlers. Second, African traditional ideas of property ownership are often obscured, and there are, in most rural areas, no clear distinctions between private and community land ownership. Normally, land boundaries are not surveyed and land tenure terms are not specified. Thus, within the indigenous land tenure framework, title registration was of little significance to the management of land resources. Land registration was also introduced, in large measure, by Europeans as the tenure system in urbanizing areas, but was sporadically enforced or largely ignored in the rural areas. Consequently, the rudimentary cadastral requirements for levying a tax on real property have evolved slowly in Africa, and the land tax experience is limited, for all practical purposes, to urban land and improvements.

The relative importance of land value taxes as a source of public revenue is difficult to establish in Africa because only rough estimates exist for a few countries on an aggregate, nationwide basis. Furthermore, financial accounts of local governments are rarely available and, as illustrated in Appendix A, land-based taxes provide a very small percentage of central government revenue. John F. Due's 1963 observation is still valid: "African property taxation, except for the European areas in Kenya, is almost solely urban taxation; nowhere is African-owned farm land subject to significant tax." [2] Thus, although real property is one of the components of the tax base in most African countries, the taxation of land values is feasible only when a well-defined registration system can be made possible. In spite of these limitations, we will endeavor to review the significance of land taxation in Kenya, Tanzania, Uganda, Malawi, Zimbabwe, and Zambia. [3]

I

Background to Land Taxation in Colonial East Africa

SOME FORM OF land taxation was already present in the Kingdom of Buganda before Britain took over effective administration beginning in 1900. The Buganda Kingdom started as a small nation comprising a few counties--namely Kyadondo, Busiro, and Mawokota in the 15th century. The ruling elite, headed by the kabaka (king) collected rent from all land-holding subjects of the Buganda Kingdom. This levy was an obligatory tax collected from each man who owned a homestead and was married. Thus, when the Uganda hut tax was introduced, it was clear that the concept of taxation was discernible to most Ugandans.

As early as 1901, the hut tax was proposed as the only practical way to raise revenue from the African rural sector. Though some scholars believe this tax was introduced to induce Africans to work on European farms, in reality the hut and poll taxes were crude wealth taxes that also served as a proxy for property rating to rural areas. The 1901 Hut Tax Regulation imposed a tax of one rupee, payable in kind or labor, upon every native hut in British East Africa. A subsequent amendment to the law allowed the tax to be levied specifically upon the owner of the hut. By 1910, other special provisions were added to the Native Hut and Poll Tax Ordinance to provide for the distress of property, or three-months imprisonment for nonpayment of tax due. However, the direct taxation of land values in Africa has a close nexus with the large scale alienation of land in the settler economy. [4] The protectorate government in East Africa argued in early 1908 [5] for preserving the means of obtaining some share of any future appreciation in the value of the land, particularly because much of the land acquired by settlers was not being developed. [6] Thus, when the Crown Land Bill was presented in 1908, it became the first legislation to propose the levying of a graduated land tax on individual holdings as a sound basis for land policy in East Africa. [7]

The 1908 Bill defined important aspects of the new system of land taxation. In the first place, any Grown land lease rated at more than Ks 180 rent would be charged a land tax in addition to such rent at the rate of six cents for every 75 cents of rent. [8] (The colonial currency then in use has been translated into its present-day equivalents. Refer to the East African currency units and exchange rates in Table 1.) The Bill also provided that whenever any individual or corporation held more than 50,000 acres; the land tax would be increased by four times the amount that would otherwise be payable. Section 137(c) further provided that an individual or corporation holding more than 100,000 acres should be compelled under penalty of Ks 325 per day to divest himself of such surplus land.