The political economy of property tax in Africa: Explaining reform outcomes in Sierra Leone

Abstract

Effective local government taxation is critical to achieving the governance benefits widely attributed to decentralization, but in practice successful tax reform has been rare because of entrenched political resistance. This article offers new insights into the political dynamics of property tax reform through a case study of Sierra Leone, focusing on variation in experiences and outcomes across the country’s four largest city councils. Based on this evidence, the article argues that elite resistance has posed a particularly acute barrier to local government tax reform, but that ethnic diversity has sometimes served to strengthen reform by fragmenting elite resistance. Furthermore, opposition councils have had stronger incentives to strengthen tax collection than councils dominated by the ruling party, in order to increase their fiscal autonomy. More generally, heightened electoral competition can lead to sustained revenue gains by encouraging city councils to adopt a more contractual approach to tax reform that stresses transparency, engagement, and equity. PROPERTY TAX HAS THE POTENTIAL to be both a primary source of local government revenue in low-income countries and a critical component of efforts to achieve the broader governance-enhancing objectives of decentralization. By providing local governments with expanded revenue, the property tax *Samuel S. Jibao (sjibao@yahoo.com) is Director of the Centre for Economic Research and Capacity Building, Freetown, Sierra Leone, and a Senior Lecturer at the African Tax Institute, Department of Economics, University of Pretoria, South Africa. Wilson Prichard (wilson. prichard@utoronto.ca) is an Assistant Professor in the Department of Political Science and Munk School of Global Affairs at the University of Toronto, and the Research Director of the International Centre for Tax and Development. 1. Pranab Bardhan, ‘Decentralization of governance and development’, The Journal of Economic Perspectives 16, 4 (2002), pp. 185–205; Arun Agrawal and Jesse Ribot, ‘Accountability in decentralization: a framework with South Asian and West African cases’, The Journal of Developing Areas 33, 4 (1999), pp. 473–502; Jean-Paul Faguet, ‘Does decentralization increase government responsiveness to local needs? Evidence from Bolivia’, Journal of Public Economics 88, 3–4 (2004), pp. 867–93. African Affairs, 114/456, 404–431 doi: 10.1093/afraf/adv022 © The Author 2015. Published by Oxford University Press on behalf of Royal African Society. This is an Open Access article distributed under the terms of the Creative Commons Attribution Non-Commercial License (http:// creativecommons.org/licenses/by-nc/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited. For commercial re-use, please contact journals.