An evaluation of the property tax in Tanzania

Abstract

PurposeThis paper aims to investigate the potential role of property taxes as a revenue source for local government in Tanzania. Often this tax is beset with political and administrative problems that affect its operational efficiencies.Design/methodology/approachThe research is the result of extensive fieldwork undertaken in Tanzania during 2002 to investigate and evaluate the valuations done for purposes of the property tax in Dar es Salaam and eight regional towns.FindingsUrban local government revenues, and in particular those classified as own revenues in Tanzania and other East African countries, are generally not sufficient enough to develop and supply adequate urban services to the region's fast growing urban population. The main findings of the paper highlight the difficulties faced by municipalities in developing and maintaining a property tax system.Research limitations/implicationsThe key problems were lack of experienced staff, limited equipment and significant political interference.Practical implicationsThis research clearly identified the need for developing countries to recognize the importance of creating sustainable tax sources that are easily managed at low costs. The work found that the property tax system as designed for Tanzania was not sustainable and suggests a range of possible improvements.Originality/valueThe research did indicate that significant results could be achieved through implementing improvements in developing a simplified valuation basis and through greater collection efficiency. The research should be of particular interest to policy and decision makers within other developing countries who are embarked on a process of property tax reform.