Valuation & Identification: ATI & LoGRI Workshop Series on Policy Design for Effective Property Taxation

Subnational governments rely heavily on property tax as a source of revenue, yet it remains one of the most underperforming forms of taxation. In order to explore strategies and opportunities for reform that enable subnational governments to harness this potential, the Addis Tax Initiative (ATI) and the Local Government Revenue Initiative (LoGRI), have co-organised a series of four workshops to strengthen local government’s capacity to mobilise domestic revenue. Based at the Munk School of Global Affairs & Public Policy, LoGRI is an initiative of the International Centre for Tax and Development (ICTD), and in partnership with ATI brings the  virtual workshop series on policy design for effective property taxation to support the implementation of ATI Commitment 1 of the ATI Declaration 2025 by which ATI members commit to “support reforms to foster equity of tax systems in partner countries in order to reduce inequalities and advance the social contract.” 

The first two workshops in the series were held online on 22 March and 23 March 2023. The workshops brought together experts, government officials, policymakers, and practitioners from various partner countries to share their experiences and insights on challenges associated with traditional valuation and property identification methods, and the potential for more effective identification through simplified valuation methods for property taxation purposes.  

Workshop #1: Strategies for Cost Effective Property Valuation Systems.

The first workshop on “Strategies for Cost-Effective Property Valuation Systems” was held on 22 March 2023 and addressed the challenges and solutions surrounding property valuation systems in lower-income countries. The speakers shared their experiences and provided insights on creating an effective and efficient property valuation system that is fair, equitable, and transparent, with country examples from Benin, Sierra Leone, and Togo. The need for a consistent and transparent methodology that can deliver progressivity and equity in the distribution of the tax burden, and that builds trust and compliance among taxpayers was underlined.  

LoGRI’s Executive Director, Dr. Titilola AKINDEINDE, moderated the session and opened the discussion by describing the main features of the dominant models for property assessment, i.e. the area-based, hybrid, and expert-driven market value assessment.  

Mr. Sitsopé KOUNETSRON, Chief of the Directorate of Cadastre, Land Conservation, and Registration at the Togolese Revenue Authority, followed with a presentation on the challenges and prospects of reforming the property valuation system in Togo. He noted that in Togo, valuation is done using the rental value of the property which is established through three methods: (1) lease valuation, (2) lease valuation by comparison to similar properties, and (3) a direct appraisal of the property on-site to determine its rental value. Mr. KOUNETSRON underscored the particular difficulties stemming from the existing valuation method, including shortages of cadastral inspectors and geomaticians, the lack of a reliable cadastral map for the interior of the country, and insufficient software and topographic equipment to support the evaluation database. These challenges render the current valuation system subjective, and pose equity concerns due to its reliance on average values without considering individual property realities. Mr. KOUNETSRON shared how Togo devised multiple reforms in response to these challenges, which comprises a comprehensive cadastral plan that incorporates crucial information on buildings for effective property taxation. In addition, Togo established reference premises with standardised (tax) values to ensure fairness in taxation and acknowledge the local nature of property tax and the potential involvement of municipalities. Togo’s ongoing reforms aim to achieve the most accurate assessment of real estate properties, and hence harness the untapped potential of property taxation. 

Mr. Evan TROWBRIDGE, technical lead, and Mr. Nicolas ORGEIRA, researcher at LoGRI, shared their experiences of implementing a simplified property valuation systems in Freetown and Kenema, Sierra Leone. They noted that traditional approaches, done through manual valuation, (i.e., valuing one property at a time) were often time-consuming, and valuation rolls incomplete, outdated, and inaccurate. In response, Freetown, with the support of LoGRI experts implemented a simplified points-based property valuation , which uses surface area and easily observable external characteristics from a representative sample of properties to arrive at an estimated market value. This valuation method ensures progressivity, equity and fairness in property taxation, and following successful roll out in Freetown,  Kenema is embarking on the same reform aimed at implementing a similar points-based valuation method.  

Mr. Charles YEHOUENOU, Vice-chairman of the Land Valuation Reform Committee in Benin’s Directorate General of Taxation (DGI), discussed Benin's experience in simplifying the taxe foncière unique (TFU), which is the single property tax on immovable assets. He highlighted the challenge of property taxation underperformance in Benin, with TFU accounting for only 0.08% of GDP, falling behind the African average of 0.22% of GDP reported in a 2017 World Bank study. To address these issues, Mr. YEHOUENOU explained that the TFU is calculated based on the property’s rental value (or potential rental income if self-occupied), but the existing system lacked consistency, transparency, and was susceptible to abuse and corruption. This complexity eroded taxpayer compliance. Consequently, Benin implemented a reform that simplified the calculation process for rental values and introduced more efficient payment methods, including online options for local taxes. To promote transparency, Mr. YEHOUENOU emphasised that the reformed TFU pricing grid has been made available to the public. However, successful implementation of the reform still requires stakeholder engagement and the updating of land registers to ensure accuracy and effectiveness. 

In the Q&A session, participants discussed the political dimension of property reforms, such as the one implemented in Freetown. LoGRI experts highlighted that the five-fold increase in revenue potential in Freetown was driven by large increases of previously undervalued high-value properties, which improved progressivity and assured acceptance among citizens. The role of communication and sensitisation for such reforms, as well as the use of GIS/satellite images/digital tools for more effective estimation, and the involvement of relevant subnational actors and ministries from design to reform implementation were brought up in the discussion.  

Workshop #2: Re-thinking Property Identification and Registration for Taxation Purposes.

On 23 March 2023, the second workshop on “Re-thinking Property Identification and Registration for Taxation Purposes” addressed alternative approaches to register properties for taxation and presented country examples from Uganda and Senegal. Dr. Colette NYIRAKAMANA, Research Lead at LoGRI, moderated the event and provided an overview of the state of art on property identification and registration, mentioning varios methods which go from as manual identification, to satellite imagery paired with ground truthing, and drone imagery. Dr. NYIRAKAMANA highlighted that although in several lower-income countries, less than 30% of properties are registered, governments that have developed identification and registration systems usually use hybrid methods.  

Mr. Norbert SERUWAGI, Manager of Compliance & Inspectorate of the Revenue Collection Directorate of the Kampala Capital City Authority (KCCA), presented the reform introduced in Kampala, Uganda, to improve property identification systems. Mr. SERUWAGI expressed that property tax represent the most important source of revenue for KCCA with around 47% of total revenue. In 2015, the KCCA started efforts to identify and register properties, which included field data collection ─ location, GIS coordinates, property attributes, and owner details ─ as well as data quality assurance, and the publication of draft valuation list with the possibility for cititzens for displaying objections that were used to update the list. As a result of this process, the KCCA undertook a comprehensive street naming and addressing, automated the property valuation process, and increased the number of registered properties from 140,000 to 370,000 and potential annual revenue increased from UGX25 billion to UGX90 billion. Mr. SERUWAGI also noted that some initiatives including integration with the Land Information Management System, and with other government agencies, such as the Uganda Revenue Authority (URA), were still pending. 

Mr. Mamadou Lamine DIALLO, Head of the Bureau of Territorial Authorities & Principal Tax Inspector of the Directorate General of Taxes and Domains (DGID), presented on the recent reforms in Senegal to identify and register properties. He outlined the legislative and technical reforms for property taxation purposes as part of a broader 2019-2023 priority action plan in Senegal.  Mr. DIALLO noted that as land registry was marginally exploited, a strategic development programme was undertaken by the DGID to enroll new taxpayers and establish a framework for their registration and monitoring, focusing on properties. Legislative reforms included the creation of local tax commissions to involve municipalities’ in property identification and sensitisation, the clarification of census procedures for enabling collaboration of local authorities in census operations, and the introduction of a synthetic tax to streamline the tax system. In addition, technical reforms included the implementation of cadastral identification numbers, the digitisation of census operations for large-scale registration, and a fiscal census that now relies on cadastral data. Mr. DIALLO highlighted among the successes of the reform an annual increase of 10% in local tax revenue since their implementation in 2019, contrasting them with some challenges that arose, namely the saturation of data and need for data simplification, lack of resources to sustain census efforts, and the taxpayers’ reduced voluntary tax declarations.  Mr. DIALLO explained that these reforms are constrained by the inadequate collaboration between technical staff and local authorities, which complicates data cross-referencing, the lack of qualified personnel, and the insufficient communication with the population to be surveyed, confirming the arguments given by Dr. NYIRAKAMANA on why various lower-income countries have failed in their efforts towards effective property identification and registration. Finally, he outlined Senegal’s plan to implement a more simplified property valuation method, and its recent experiments with simplified methods that rely on observable property conditions.  

Dr. Wilson PRICHARD, ICTD's Executive Director and Chair of LoGRI, proceeded with featuring a compelling “property-tax first” approach for property registration and raising revenue, challenging the dominance of the “cadastre first” approach. The latter could be costly, slow, and creates desincentives to registration among owners if registration leads to taxation, while being also heavily dependent on central-local government collaboration. On the other hand, the “property-tax first” approach empowers local governments to register properties, irrespective of formal registration status, and ─ if properly designed ─ could be implemented in a very short period of time (e.g. six months in Freetown). The approach changes the mindset from “I will not register my property; hence I will skip taxation” to “My property will be taxed anyway”, creating incentives for own registration, strengthened land registration and urban planning, as well as sharing of data with other government agencies for business registration for instance. 

During the Q&A session, participants discussed several challenges related to establishing legal ownership and the potential risk of shifting the tax burden onto tenants. Dr. PRICHARD proposed a potential solution to address this risk by developing a legal framework that allows tenants to pay taxes on behalf of property owners while being able to deduct this payment from the rental value. Furthermore, the importance of citizen sensitisation regarding the reform and collaboration with local leaders to identify property owners were highlighted by Mr. SERUWAGI as key elements of the significant increase in property registration in Kampala. Additionally, ongoing research in Zambia was mentioned as a response to addressing the complexities of hybrid property ownership, such as communal properties. 

The third and fourth sessions of the ATI & LoGRI Workshop Series will be held on 19 and 20 July 2023. While the third workshop will focus on practical information technology systems in property tax administration, the fourth session will conclude the workshop series with presentations on building on taxpayer trust, compliance, and public support for reform. 

For more information on the inputs shared during the first and second session, kindly find here the presentations of our speakers.