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.
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Publications:
This book shows how Pakistan’s inability to collect taxes reflects a broader disconnection between the state and its citizens, which translates into growing fiscal deficits, poor service delivery, increasing socio economic inequalities and low democratic accountability. Through extensive primary fieldwork, which included original interviews with tax bureaucrats and policymakers, detailed archival work and analysis of…
The current COVID-19 pandemic and associated economic crisis have seen Africa fall into recession for the first time in over 25 years. This has strained already limited local government resources significantly. At the same time, the pandemic has highlighted the central role local governments play as frontline service providers and thus reignited the urgency of…
This paper examines the effect of intergovernmental fiscal transfers on the fiscal behaviour of local governments in Ethiopia for the period 2004-2018. The empirical findings suggest that central government grants bolster state-level employment and expenditure. However, grants from the central government to states do not crowd out state-level revenue collection. Hence, this paper argues that…
The importance of tenure security for development and wellbeing is often reduced to questions about how titles can guarantee rights, overlooking the contested and layered nature of property rights themselves. We use the case of Lagos to analyse property rights as ‘analogue’ rather than ‘digital’ in nature – things that only exist by degree, where…
Efforts to reform property tax systems in African cities tend to focus more on how to value properties for purposes of tax assessment than on how to better collect taxes due. The same is true of the literature on property tax reform. There is however reason to believe that a greater initial focus on improving…
The current method of property valuation in Freetown, Sierra Leone is highly inaccurate and generally regressive, as it does not take subjective property characteristics that are major determinants of value into account. The newly elected Mayor Yvonne Aki-Sawyerr made revenue mobilisation a central pillar of her ‘Transform Freetown’ agenda. As a means of achieving this,…
Uganda embraced decentralisation as a system of governance in the early 1990’s. The success of decentralisation was pegged on the capacity of the local governments to mobilise their own revenues in order to fulfill their responsibilities. Before its suspension in 2005 and eventual abolition in 2008, graduated tax constituted a dominant source of local revenue….
Uganda was among the first African countries to embrace a decentralised system of government in the 1990s. The objective of this policy was to bring services closer to the people while at the same time enhancing local participation and democracy. The success of decentralisation was, however, greatly dependent on the amount of funds and other…
Public finance theory suggests that property tax is an ideal local tax. But it’s also a ‘data-hungry’ tax, making it difficult and costly to administer properly— especially at the local government level where capacity, skills and resources are often lacking. Given its high data demands, property tax administration lends itself to the application of modern…
Property taxes are an important revenue source for subnational governments. Across sub-Saharan Africa collection of property taxes is made up of several distinct processes, some situated at the national level, and some at the local level. Thus, inter-organisational cooperation and institution-based trust are essential for the successful implementation of property taxation. Because of the common…
Blogs:
Ghanaian local governments – metropolitan, municipal, and district assemblies (MMDAs) – face several challenges preventing them from raising more revenue from property taxes. These challenges include limited access to information about properties such as location, ownership and accurate valuations. As part of its programmes, VNG International (the International Cooperation Agency of the Association of Netherlands…
Borno State, in north-eastern Nigeria, has faced intractable security challenges in the last decade that has led to the destruction of businesses, livelihoods, property and public infrastructure. As a result, real estate in the capital of Maiduguri and other peaceful areas has seen an increase in demand. Normally, a real estate boom would lead to increased…
The recent Pandora Papers leak has exposed yet again the scandal of how the world’s rich and powerful hide their wealth and avoid paying taxes. The revelations are particularly galling during a global pandemic, when tax revenue to invest in public services and social safety nets is more needed than ever. The pandemic has pushed…
Research Projects:
This project seeks to measure village-level costs and potential revenue associated with property taxation in rural Sierra Leone (Kono District). The only variable cost associated with rural tax collection in this context is tax collector transportation costs. While travel costs can easily be obtained for any village, the most cost-effective way to measure potential revenue…
This research programme seeks to address four overlapping questions through a combination of (a) randomized controlled interventions in the reform programme, (b) exploiting discontinuities in the implementation of reform to identify causal impacts, (c) systematic tracing of the impact of the reform programme on popular attitudes and behaviours, and (d) the mapping of compliance data…
How do government actions toward the poor influence other citizens’ perceptions of the government? Does making citizens aware of forced evictions – used by the government in the name of development – reduce their willingness to invest in the capacity of the government by paying taxes? We seek to build upon our 2018 pilot survey…
Graeme Stewart-Wilson will be working with researchers and tax authorities in Sierra Leone to document and derive lessons from ongoing and relatively successful reform efforts. He will be writing up at least two case studies – one related to reform efforts at the National Revenue Agency, led by long time ICTD partner Samuel Jibao, and…
The IMF and World Bank revenue statistics show that, between 2000 and 2012, property taxes represent on average of 0.1 to 0.2% of GDP in Sub-Saharan Africa (0.1% in Senegal). In OECD countries, the average range is between 2-3% of GDP. This poor performance suggests considerable scope for improvement. In Senegal, as in most developing…
How do states in a low-tax, low-capacity equilibrium spur citizens to start paying taxes? This experiment would examine the direct and network effects of an increase in tax enforcement by the government on tax compliance. We partner with the Provincial Ministry of Taxation and randomly assign firms in the city of Kananga, DRC, to one…
The African Property Tax Initiative (APTI) has increasingly been approached by governments in sub-Saharan Africa interested in exploring simplified approaches to property valuation for property taxation. This interest grows out of ICTD research which has demonstrated the efficacy of this approach and several secondary cities in Africa, and which has more generally argued for the merits…
This study will evaluate the experience of KCCA in the enforcement and collection of property rates with an objective of understanding some of the reasons why the Authority has been more successful than the rest of the urban authorities and local governments (four of these will be studied alongside KCCA). In particular the study will…
The main objective of this research is to examine the collaborations between national and County Governments in property tax administration with the aim of elaborating the policy frameworks and practices; and to articulate the general challenges in Kenya and specifically in Kiambu and Laikipia Counties; and to provide policy recommendations based on the findings.
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…