ICTD Summary Brief 12
Should central or local governments be responsible for collection and administration of property taxes? There is great variation in practice across the continent, but one particularly significant divide is that between francophone and anglophone countries. The former commonly adopt centralised systems, while the latter usually decentralise key aspects of property taxation such as collection and administration. This divide has its roots in different modalities of colonial rule, but was exaggerated through the trend towards decentralised governance that took hold in the 1990s, supported by Anglo-American development assistance. However, a number of anglophone African countries have attempted to partially reverse fiscal decentralisation since the late 2000s particularly with respect to collection of the tax. International debate is increasing about which level of government should tax property, but currently there is little by way of an evidence base on the relative benefits of each approach. This policy brief explores some of the strengths and weaknesses of decentralised versus centralised approaches, the incentives they create for government authorities to collect the tax, and some of the political challenges of rearranging central-local relations. It suggests that the question of whether to centralise or decentralise the tax as a whole oversimplifies the problem. Property taxation is made up of a number of distinct processes, some of which may be better situated at national or local government level depending on the context. Before disaggregating property taxation into its key constituent elements, some common general arguments for taxing property at a local versus central level are considered.