Property Tax Administration: The untapped revenue source for District Assemblies in Ghana
For decades, District, Municipal, and Metropolitan Assemblies (MMDAs) in Ghana have faced a familiar challenge: generating sufficient internally generated funds (IGF) to fulfill their mandate of development and service provision. While they await often-delayed District Assembly Common Fund transfers from the central government, a potent and sustainable revenue stream lies largely untapped right under their feet—property tax.
Property tax, a levy on owners of landed property, is widely recognized as one of the most equitable and efficient forms of local government revenue. It is tied directly to the benefits principle: residents who enjoy local services, such as street lighting, waste collection, security, and drainage and sanitation, should contribute to their cost. Yet, in Ghana, property tax collection remains fraught with inefficiency, evasion, and immense potential. Unlocking it is not just a financial imperative but a cornerstone for true local governance and development.
The promise and the peril: The current state of property tax
The potential revenue from property taxes is staggering. Ghana has experienced a significant real estate boom over the past two decades, with new residential and commercial properties springing up in urban and peri-urban areas. A well-administered property tax system could translate this physical development into a reliable revenue stream to fund critical local projects. However, the reality is a tale of missed opportunities. The current system is plagued by:
Outdated property valuation rolls: Many assemblies rely on valuation lists that are over a decade old. Properties have appreciated significantly in value, and new ones remain unregistered, meaning assemblies are collecting a fraction of what they should.
Inefficient manual collection systems: The process is often manual, paper-based, and prone to leakage. Collectors may not issue receipts, and funds sometimes fail to make it to the assembly’s coffers.
Low public compliance and trust: Many property owners do not see the direct link between their tax payments and improved services. When they pay taxes but see overflowing garbage and poor roads, their willingness to comply diminishes, creating a vicious cycle of underfunding and poor service delivery.
Political interference: Assembly members and officials sometimes hesitate to enforce tax laws rigorously, fearing a political backlash, and may grant exemptions or write off debts for short-term popularity at the long-term expense of development.
The consequences of neglect
The failure to harness property taxes effectively has dire consequences. MMDAs are left:
- Perennially dependent on the Central Government, undermining the core principle of fiscal decentralisation.
- Unable to execute planned projects. Development plans remain beautiful documents gathering dust on shelves.
- Forced to rely on unpopular and often regressive nuisance taxes on small businesses and informal sector operators, which are easier to collect but less equitable and economically damaging.
Tapping the well: A blueprint for reform
Transforming property tax from a theoretical potential into a tangible revenue stream requires a concerted, multifaceted effort. Here is an achievable blueprint:
1. Digitalisation and Modernisation: This is the most critical step. Assemblies must invest in a modern, digitalised property tax administration system. This includes:
- A Digital Property Database: Using Geographic Information System (GIS) technology to map, identify, and uniquely number every property within the jurisdiction. Drones and satellite imagery can help identify new and concealed properties.
- Mobile Money and Electronic Payment Platforms: Making it effortless for property owners to pay via mobile money, bank transfers, or at designated banks. This reduces the handling of cash and improves transparency.
2. Regular Revaluation: Instituting a mandatory revaluation of properties every five years. This ensures the tax base reflects current market values, thereby enhancing fairness and boosting revenue without necessitating a tax rate increase.
3. Performance-Based Collection: Engaging reputable, technology-driven private agencies on a performance-based commission to support revenue collection can improve efficiency and reduce corruption. However, this must be done with strict oversight to prevent abuse.
4. Transparency and Accountability (Show the People the Money): This is the key to building public trust. Assemblies must clearly communicate how property tax revenue is allocated and utilised. Publishing quarterly reports showing revenue collected and specific projects funded.
5. Erecting signage at project sites: “Your Property Tax Contributions funded this Community Classroom Block.” Holding town hall meetings to account for the use of funds and incorporate public feedback into budgeting.
6. Strengthening Legal Enforcement: While encouraging voluntary compliance is ideal, assemblies must also be willing to use the legal tools at their disposal, including penalties and, as a last resort, court actions against persistent defaulters, to ensure fairness for all.
A call to action
The journey to effective property tax administration is not easy, but it is necessary. It requires political will from Assembly Members and Chief Executives, technical support from the central government and development partners, and a change in mindset from property owners.
The benefits are transformative. Reliable IGF from property tax would empower MMDAs to repair local roads, improve sanitation, support education and healthcare facilities, and drive grassroots development. It would make assemblies truly accountable to their constituents, not just to Accra.
The largest untapped resource for our local development is not underground; it is above ground. It is time for District Assemblies to look to the properties within their communities and harness this powerful source of revenue to build the Ghana we want from the local level up.
BY BABA ADAM, PHD. CANDIDATE
