Property Tax in Anglophone Africa - Issues and Constraints                    Page 1 of 3
THE WORLD BANK GROUP
WORLDBANK
Findings AN
AfricaRegion. Nr    1993                                                AND
Findings reports on ongoing operational, economic and sector work carried out by the World Bank
and its member governments in the Africa Region. It is published periodically by the Africa Technical
Department on behalf of the Region.
Property Tax in Anglophone Africa - Issues
and Constraints
The purpose of this manual is to provide an easily accessible guide to property tax administration in
anglophone Africa. This is not an academic text book. There is much already written on property tax
by economists and academics. There are plenty of text books on valuation. There are few, if any,
books on how to organize a revaluation. The intended readership is valuation officers in Africa,
project leaders in the World Bank and other lending institutions, consultants designing property tax
systems, and African legislators, senior civil servants concerned with local governnent, and
politicians.
This manual is the result of a joint initiative by the UK Overseas Development Administration
(ODA) and the World Bank. It was developed under the aegis of The Municipal Development
Program for Sub-Saharan Africa (MDP) - a collaborative undertaking of development agencies and
African institutions established to help provide the analytical capabilities and resources to enhance
the effectiveness of African urban local governments. The manual is part of a series of publications to
support the MDP objective of promoting the analysis and debate of policy, strategies, and state-of-the
art thinking on topics vital to local government in Sub-Saharan Africa.
In general the advice and guidelines in the manual are prescriptive. They will not fit every
circumstance without adaptation. The suggested solutions are not the only ones that can work. Of the
many locally raised sources available, property tax is often the most effective. It is a very visible tax.
It is hard to avoid. It has the potential to yield about 10 percent of the total tax revenue from all
sources, whether collected nationally or locally. Property tax is generally cheap to administer.
Collection only requires determination and neither valuation nor collection depend on a high level of
technology. Why then does property tax account for a small proportion of tax revenue in many
African countries? Many articulate voices will be raised in protest causing political difficulties. When
considered in relation to other taxes this is usually its weakest point.
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Property Tax in Anglophone Africa - Issues and Constraints                        Page 2 of 3
The manual contains eight chapters. Chapter 1 deals with Preliminary Planning and the importance of
establishing a sustainable policy framework. It lists four broad policy issues that must be addressed
before attending to the practical difficulties of improving and/or introducing a property tax. They are:
i) The level of decentralization and central-local government financial flows. Property tax is
always a central issue in the question of decentralization since this is usually a local tax. How
committed is government to the decentralization? In many instances, a decision to improve
property tax may be initiated to give local government the financial resources to fulfill its
obligations. Before any decision or action is considered on local government finance, it is
necessary to assess: first, how much devolved power local government already has both in
theory and in practice; and second, whether there is a policy to make a greater devolution of
power; and third, the extent to which central government is in practice prepared to give up its
control over local government.
ii) Where does property tax fit within the general tax structure? No tax can be considered in
isolation. Any proposed improvement to property tax must be looked at in the context of the
tax system generally, and not only in relation to locally-generated revenue. There are two main
areas of concern. The first aspect to examine is how far other taxes affect property and whether
this could affect proposed improvements to property tax. The second aspect is how will the
combined burden affect the property owner? It is obviously undesirable to over tax a particular
sector, for both political and practical reasons.
iii) Property tax as an efficient and effective means to mobilize local government revenues.
Property tax, or an increase in property tax, should be considered along with other taxes, fees
and licenses. The first task is to identify all the sources of locally-generated revenue collected
at present and assess what percentage each represents of all locally-generated funds. What are
the possibilities for increasing the level of tax, fees, or licenses? Are they buoyant with
inflation? How are the levels decided? Are there administrative problems to raising the levels?
How much will the improved tax or fee yield?
iv) How to improve the property tax system. A step-by-step guide describes the necessary steps
to examine and assess existing records, carry out a field exercise, and estimate a potential yield
after improvements or a revaluation. There will be defects. There will also be some strong
points which can be built on.
Two "design questions" are presented and covered in detail. The first design question addresses the
issue of organizing valuation and estate management resources within the public and private sector.
Appropriate institutional and political modalities and administrative arrangements are provided. The
second design question addresses the institutional and implementation issues involved in instituting a
Property Valuation system. It addresses practical questions such as what measures should be used to
make the assessment? How should property be valued? Does the law clearly stipulate who is liable to
pay tax?
Chapter 2 provides guidelines on how to set up a Valuation Office including the kind of staff skills
required, examples of organizational charts for valuation departments/structures (centralized,
decentralized and privatization of the valuation function), short and long term strategies to meet
critical skill gaps, upgrade staff and equipment requirements including the costs and benefits and
suitability of computerization over manual rolls.
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Property Tax in Anglophone Africa - Issues and Constraints                        Page 3 of 3
Chapter 3 deals with Collection. Collection is the last stage in the sequence of Property Tax
Administration following Discovery, Valuation, Assessment, and Billing. Technically, the process of
collection may be less demanding than assessment, but it is equally important in that it is a common
cause of failure. Early improvements in the collection system must run parallel to preparation for a
revaluation. Other factors vital to a smooth collection process include galvanizing political will,
developing management skills and where possible utilizing the private sector.
The core of the book is Chapter 4 which gives practical instructions on how to get a revaluation
done. This chapter details the step that need to be taken to develop a plan for the revaluation, a
process for property identification and discovery so that each entry into the valuation list can be
identified on the ground by staff in the valuation office, collection office and by the general public.
An identification check list is included. This chapter addresses practical questions such as: What is
the critical information needed for the valuation list and how do you collect it? What is the difference
in using mass appraisal versus an individual valuations approach? Practical suggestions are provided
regarding what key office records to keep, how to develop a property classification system and a
national codes. The chapter concludes with how the Valuation Office can deal with queries, and
formal appeals of taxes assessed by property owners.
Chapter 5 covers management issues related to the day-to-day running of the valuations office. The
key message is this: The efficient and effective execution of routine administrative duties and
maintenance of an up-to-date information base guarantee that future revaluations will be done on a
regular basis with minimum effort. This will require obtaining information on new properties and
alterations on existing ones; continuous referencing through reinspections in established areas and
new inspections in expanding areas. Quality and technical control of information collection and
assessments is key to maintaining an up-to-date accurate roll.
Making property tax politically acceptable is the theme of Chapter 6. The public must be informed of
the link between the levels of property tax and the level of services received. The key is to share the
burden of property tax. There must be "safety valves", the most important of which is an easily
accessible and honest valuation appeal and tribunal.
Finally, Chapter 7 lists briefly some key performance indicators and criteria by which success may be
measured. Targets are provided as a reality check.
Simon Keith. 1993. Property Tax - A Practical Manualfor Anglophone Africa. Technical Paper No.
209. Africa Technical Department. Washington. D.C.: WorldBank.
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http://www.worldbank.org/afr/findings/english/findO3.htm                             9/13/01