Prioritise property tax administration in Ghana – Bright Simons to gov’t

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Honorary vice president for IMANI Centre for Policy and Education, Bright Simons has called on the government to prioritise the property tax system in the country since it has the potential for generating enough revenue for the state.

According to Bright Simons, despite the huge potential of the property tax system to the country’s revenue generation, the sector has not been properly developed and utilized which is leading to huge losses.

In a Twitter post, Mr. Simons made a comparative analogy concerning how other countries such as the US and South Africa generate revenue from property tax relative to the situation in Ghana.

“In New York, property tax constitutes 44% of total city income. On average, Accra districts and municipalities make less than 5% of their revenue from property tax. The AMA makes ~$2.1m from property taxes (~10% of income), down 30% from 2016,” the IMANI fellow indicated.

Addressing the problem with Ghana’s property tax administration, Bright Simons asserted that “the expert valuation model used in Ghana is costly, even if based on surveys. In Sierra Leone, they are trying satellite data and feature benchmarks. In countries with strong spatial planning, property taxes are the easiest to collect. The theoretical collection rate has been pegged at 95%. Cost of collection = 2%. The AMA says that its success rate is ~20% due to the complexity of maintaining valuation rolls & delinquency.”

“Fact is: expert valuations, including extrapolations from surveys, end up relying on subjective proxies. So why not use a cheap proxy that can still increase property tax yield? I propose a composite measure based on water, electricity & telecom bills & collected digitally,” Bright Simons recommended among other suggestions.

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