Abstract
Much literature has been written about the appeal of property tax as a stable source of revenue for subnational governments in developing countries. Building on this significant background of literature is the author’s practical experience working in local government institutions within both Sierra Leone and Malawi. This article relates to the development and testing of a process of mobilizing the internally generated property tax revenues of local governments, and reports on the results of that process, and the challenges and lessons learned.
Highlights
Property tax is often cited as an attractive method of raising local revenues since much of the burden is borne by the people who live in the jurisdiction
The tax for an assessed house having a value of 500 points would be calculated as: Value 500 x mill rate 165 = Tax amount of MWK82,500 It is the councilors who resolve the mill rate based on the required municipal work budget, and balanced with the affordability of the tax to individual taxpayers
The publicity explains to residents the purpose of the Revenue Mobilisation Program (REMOP), the upcoming steps and importantly the basis of their tax liabilities, informs about rights and obligations of Council and residents
Summary
Property tax is often cited as an attractive method of raising local revenues since much of the burden is borne by the people who live in the jurisdiction. The Revenue Mobilization Program (REMOP), developed by the author and implemented in several subnational governments, seeks to address the high costs by using modern technology and developing a recording structure to capture all properties, simplifying and automating the valuation process, employing computer aided mass valuation, and enhancing both the collection and the enforcement of the tax. A complete discovery or capture/study of all properties to be assessed is required to achieve a complete inventory of buildings within the boundaries of the local council authority. For practical reasons the local councils in Sierra Leone and Malawi accepted the author’s recommendation of vacant land exclusion. The REMOP valuation adopts the area-based approach but introduces a number of building features that can add or detract from the value and the desired progressivity of the property tax is achieved. The graph shown below shows the results of the harmonisation where the correlation coefficient is calculated at 0.83
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