PRETORIA – The African Tax Administration Forum (ATAF) is getting ready for the 6th African Tax Research Network (ATRN) Congress which will take place virtually from 6-8 September 2021.
The theme of the congress is Maximising Property Tax Revenue Through Digitalization.
The Congress is expected to attract experts from the African tax administrations, academia, private sector, civil society organisation (CSO) and policymakers and officials working on property taxes in Africa and beyond. Several good practices on the property tax reform will be discussed including that of Freetown city council in Sierra Leone.
As reiterated by Rose Wanjiru, the Executive Director, Centre for Economic Governance, in the Kenya Revenue Authority, property taxes are a major source of revenue for governments.
“[Property Tax] it’s a sleeping giant that has not been harnessed by many sub-governments, which if well harnessed, would increase the fiscal capacity and reduce their over-reliance on transfers from national governments. This revenue stream needs to be improved.”
Participants and delegates can look forward to themes such as, but not limited to:
- Unlocking the potential of property tax amidst negative impacts of COVID-19 on government revenues.
- Supporting property tax reforms through digitalisation
- Politics, governance, policy and legislation toward efficient property tax reforms in Africa
HERE’S WHAT YOU CAN EXPECT:
Day one and two will be characterised by policy discussions as well as parallel research sessions, where people will breakaway into virtual rooms for different discussions on different themes.
Day three will be characterised by policy dialogues and the introduction of an exciting publication.
The congress was scheduled to take place in hybrid format (Physical + Virtual) but due to COVID-19 restrictions, it was decided for it to be virtual.
These challenges will be the subject of the event in September.
Register for the congress here.
FREETOWN CITY COUNCIL’S PROPERTY TAX REFORM PROGRAMME AND OUTCOME
Even though Freetown City Council’s revenue potential from property taxes is high, collection has been very low. This is not only because of low compliance but also the relatively obsolete and subjective approach to property assessment for tax purposes as well as the lack of a comprehensive and up to date database.
The primary objective of the reform programme was to increase property tax revenues by about five-fold (from Le7billion in 2018 to Le35billion in 2020), to finance Council’s development agenda. The valuation method adopted was to ensure that the tax system is relatively fair and progressive. This implies that every property in the city was subjected to an identical valuation process, and that the relative values assigned to properties approximate their market values.
The reform started with a pilot in late 2018 with over 11,000 properties. As a result of the successful implementation of the pilot, it was scaled-up to the rest of the city in 2019. It had the following key steps: discovery, valuation/assessment, taxation/billing, collection and enforcement components:
Discovery: To capture all properties within Freetown, satellite imagery was used to identify and measure all properties while teams of enumerators and supervisors were deployed to collect data on a standard list of easily observable external characteristics of each property.
Valuation/Assessment: this was aided with expert information about market rental value for a subset of over 2,000 randomly selected properties. This was obtained from a rental survey conducted by the experts. The rental value data was used to calibrate a simple model for translating property characteristics into an assessed taxable value for each property.
Taxation/billing: The assessed taxable values were added and multiplied by the Mill rate to determine the tax for each property. The production of rate demand notice was automated with unique identifiers for each property (e.g. address, location, and photo) and an explanation of the content of the rate demand notice.
Payment and Collection: Once taxes have been determined for each property, the rate demand notices (RDNs) are printed and distributed. The printing and distribution of RDNs was outsourced to a private firm with a clear process for tracking deliveries. Payments were required to be made to designated banks with clear identifier to match payment to taxpayer.
Enforcement: Consistent with the Local Government Act, an enforcement guide was prepared.
The main outcomes of the reform include the following among others:
• At the end of the discovery/data collection phase in early 2020, Freetown City Council’s property tax register increased by over 100% (from about 57,000 to over 120,000). The new database reflects the status of the properties which was useful for tax valuation/assessment purpose.
• Council now have a fair idea of its property tax potential which could be useful for planning purposes. Based on the reform, the top 25% of the properties would now contribute 70% of the revenue potential.
• A relatively simplified, automated, fair and progressive system largely driven by data have been developed and adopted.
The ATRN, hosted by ATAF, is a platform for African tax research that aims to facilitate African capacity for credible research in tax policy, administration, law and leadership. It was created to meet the need for identifying potential synergies and linkage areas between academics and tax officials from the ATAF member countries.