Subnational and Property Tax

While policymakers and academics have increasingly given attention to national-level taxation in developing countries, local government taxation has remained relatively neglected. Yet local taxes have broad and direct impacts on citizens in low-income countries and are likely to have important implications for small business growth, local service delivery, equity, governance, and accountability. Property taxes are of particular interest, as they have significant revenue potential and are non-distortionary, progressive and easily linked to public services – but are nonetheless severely underused in almost all developing countries. Our research aims to build a more extensive body of empirical research on the potential reform of subnational and property taxes, with an emphasis on political economy challenges and cross-country comparison.

Publications:

January 2019
Property Tax in African Secondary Cities: Insights from the Cases of Kisumu (Kenya) and M’Bour (Senegal)
by Liza Rose Cirolia & James Christopher Mizes

This working paper adopts an urban lens on property tax. It focuses specifically on how property tax operates in two African secondary cities, Kisumu (Kenya) and M’Bour (Senegal). The paper identifies three factors shaping the low levels of property tax collection in the two case cities. These are the misalignment between the spatial scale of…

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November 2018
The Role of Information Communication Technology to Enhance Property Tax Revenue in Africa: A Tale of Four Cities in Three Countries
by William McCluskey, Riël Franzsen , Mundia Kabinga & Chabala Kasese

Information communication technology (ICT) is an important tool to support local governments in their efforts to more efficiently administer property taxes and other own-source revenues. Increasingly, developing countries, including those in Africa, are managing large volumes of data on taxable properties and taxpayers within the ICT environment. With reference to four African cities, this paper…

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How Local Authorities Can Exploit the Potential for Effective Property Taxes: A Case Study of Harare
by Munatswi Nengeze

This paper explores administrative challenges that developing countries face in property tax administration. It is internationally acknowledged that local authorities play a vital role in enhancing a country’s economic growth and provision of public goods. Their activities rely on revenue collection. It is therefore in the public interest and the interest of all governments to…

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September 2018
Does Fiscal Decentralization Enhance Citizens’ Access to Public Services and Reduce Poverty? Evidence from Côte d’Ivoire Municipalities in a Conflict Setting
by Tiangboho Sanogo

Fiscal decentralization has been implemented in many countries with an explicit objective of improving public service delivery and reduce poverty. However, its effectiveness in achieving these goals are much debated and the empirical literature has mostly focused on poverty reduction using cross-country analysis. This paper analyses whether, and how, the devolution of revenue raising responsibilities…

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Property owners’ knowledge and attitudes towards property taxation in Tanzania
by Merima Ali, Odd-Helge Fjeldstad & Lucas Katera

Property taxation (PT) is high on the political agenda in Tanzania and considered a cornerstone of the Government’s efforts to strengthen broad based direct taxation. Because it is visible to taxpayers, and in principle linked to improved local services, PT holds a unique potential to act as a foundation for bargaining between taxpayers and governments…

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True Values
by Nyah Zebong & Wilson Prichard

Where property markets are still developing, there is little sales data on which to base valuations. As a result, it is more difficult to assign accurate property valuations, there is greater scope for abuse, and these valuations are more likely to be contested.In peri-urban or rural areas where property markets are almost non-existent, a value…

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Practical Guidance Note: Training Manual for Implementing Property Tax Reform with a Points-Based Valuation
by Paul Fish

This paper shares the author’s on-going experience in supporting the implementation of property tax reform programmes in smaller urban centres and rural districts in Sub-Saharan Africa, covering more than 12 local governments over a period of more than 10 years. The paper presents a generic training manual, designed to offer practical guidance for property tax…

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Taxing Africa: Coercion, Reform and Development
by Mick Moore, Wilson Prichard & Odd-Helge Fjeldstad

Taxing Africa is an accessible and comprehensive introduction to the crucial debates around taxation and development in Africa. Taxation has been seen as the domain of charisma-free accountants, lawyers and number crunchers – an unlikely place to encounter big societal questions about democracy, equity or good governance. Yet it is exactly these issues that pervade…

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March 2018
Subnational Value Added Tax in Ethiopia and Implications for States’ Fiscal Capacity
by Wollela Abehodie Yesegat & Richard Krever

In most federal systems, state governments are funded through a combination of direct fiscal transfers from the central government, and the revenue they collect directly from locally adopted taxes. Ethiopia is a federal polity, but follows a slightly different path in the case of its most important tax source – value added tax (VAT). As…

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Property Taxation in Kampala, Uganda: An Analytic Case Study on a Successful Reform
by Mihaly Kopanyi & Riël Franzsen

Kampala’s revenue reforms offer lessons that large and powerful cities should not wait for national actions, rather, they can do a lot “in-house” to improve tax administration, coverage, and collection. Against the rather poor performance of the property tax in Uganda, Kampala’s reforms have resulted in unprecedented increase of own-source revenues generally and the property…

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Blogs:

October 2018
by Nyah Zebong

Property Tax Reform in Senegal In recent years there has been much focus in Africa on adopting forms of taxation that enhance economic growth, but also ensure equitable, stable and sustainable sources of funding to governments. This is true for revenue mobilisation efforts that benefit both national and sub-national governments across the continent. The need…

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August 2018
by Kas Sempere

What does tax justice mean at the local level, and how can the experiences of informal market traders be linked with broader international campaigns? This blog draws out insights from ActionAid’s experience of incorporating the demands of market traders in Nigeria into its international tax justice campaign.

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July 2018
by Bukola Bolarinwa, Olly Owen & Tom Goodfellow

Since the turn of the millennium, the Lagos State government has made no secret of its ambitious plans to become an African ‘world class’ city, realizing its vision through borrowing as well as increased tax revenues. With 70% of the State being made up of water, land is a scarce and precious resource, so much…

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Research Projects:

Past Project
An Analysis of the Relationship Between the State and Councils in Administering the Land Tax in Benin
Project Researchers: Kelly Labart, Bassirou Sarr & Damas Hounsounon

This research is looking into how we can maximise efforts to collect property tax and whether or not councils are better off by delegating this task to tax authorities. If the answer to this question is yes, then ways in which we can encourage the tax authorities to maximise efforts to collect this tax will be addressed. The project with also be looking to uncover the different forms of resistance to the property tax and how these are to be surmounted. What are the political factors in play? How do you ameliorate tax compliance especially with respect to major property owners?

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Understanding the Potential Role of the Property Tax in Addis Ababa
Project Researchers: Gabriella Yolanda Carolini, Fitsum A. Gelaye, Massachusetts Institute of Technology & Tigist K. Temesgen, Addis Ababa University

Urban real estate markets on the African continent are booming with construction and international investment (Bradford, 2014; Davis, 2015; National Association of Realtors, 2016; Salinas, 2013; The Business Year, 2014a, 2014b). A few trends spur this bullish approach to urban Africa real estate. First, demographic estimates for the continent—including urban population growth and the proportion of the youthful population—are widely read as critical indicators of future economic growth (United Nations Economic Commission for Africa, 2017). Africa, along with Asia, hosts the most rapidly urbanizing population – located in small and medium-sized cities, and the continent’s urban population is predicted to triple by 2050 (UN 2015). Second, related to urban population growth, a growing middle class population in a number of countries is expected to boost both demand for services as well as supply, with important consequences for housing and commercial real estate markets (Deloitte, 2011; National Association of Realtors, 2016). Third, from a relative perspective, African luxury real estate in particular is considerably cheaper than other markets in Asia or Latin America (Jansen, 2015), spurring a boom in markets geared toward international investors even while affordable housing for domestic populations remain under-financed (Lall, Henderson, & Venables, 2017). While of course major challenges remain, including the extension and upgrading of critical infrastructure in both urban and rural areas, this picture of urban African real estate markets is increasingly driving international speculation on land and fueling revisions of city futures on the continent (Carolini, 2017; Watson, 2014). This research project seeks to understand how to facilitate wide benefit from this boom in African cities. The central premise of the proposed work is that the distributive potential of Africa’s urban real estate boom depends on the strength of governments to socialize project benefits. Worldwide, the municipal property tax is widely recognized as a critical mechanism that holds the potential to effectively address this distributive challenge.

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