Property tax reforms for localising the SDGs and reducing inequalities
The benefits of domestic revenue mobilisation (DRM) reforms at the subnational level to advance the 2030 Agenda for Sustainable Development are increasingly gaining the attention of the international development cooperation community. The Addis Tax Initiative (ATI), the Development Partners Network on Decentralisation & Local Governance (DeLoG) and the Norwegian Agency for Development Cooperation (Norad) have teamed up to organise a series of webinars on the importance of subnational DRM. The first webinar aimed to raise awareness for the role of local governments in raising revenues.
On the second webinar of the series, which took place on 19 May 2021, we explored how property taxes can help unlock the revenue-raising potential of local governments. Addressing how can they help improve the fiscal space of local governments while combating inequalities, the webinar contributed to the overall goal of bringing the local governance and tax communities closer together to enhance equitable and efficient DRM at the subnational level.
The webinar was kicked off with a keynote input by Wilson Prichard, Chief Executive Officer of the International Center for Tax and Development (ICTD). He gave an overview of the role of property taxes in raising revenues to reduce inequality and finance public service delivery. He explained their potential for supporting revenue raising that unlocks the potential of decentralisation, while also underlining that the success of property tax reforms is often hindered by policy design weaknesses, ineffective data management and administration, and several technical and political barriers. “The ability of governments to respond to local preferences depends on the fiscal autonomy that comes from own source revenues, while the accountability relationship between citizens and governments can be buttressed by that tax relationship that they developed.”
Rosetta Wilson, Financial Management Advisor at the Mayors Delivery Unit of Freetown, discussed the tax property reform that took place as part of the Transform Freetown Agenda. She presented the reform’s targets, highlighted the baseline challenges and laid out the approach followed, which included the large use of technology for data collection and management. The creation of databases and monitoring tools allowed Sierra Leone's capital to assess property values more transparently and equitably and to ultimately largely increase revenue collection.
Samuel Sserunkuuma, Director Revenue Collection at the Kampala Capital City Authority, presented his experiences from introducing property taxes in Uganda’s capital. He presented the Kampalas’s current property rating regime and the numerous reforms that were put into action to make it more precise, ultimately having it serve the interests of citizens. Among the challenges encountered in implementing the reforms, high costs, a lack of public understanding of the rates and inability to pay were mentioned.
Siebe Stellingwerf, Project Manager Taxation at VNG International, presented the organisation's integrated and innovative approach to subnational DRM, providing the perspective of a development cooperation actor supporting local taxes systems in partner countries. The approach is based on the concepts of inclusion and involvement of all actors, as well as improved policies and use of technology for efficiency. He stressed the importance of political commitment at all levels and of technical challenges for the success of DRM at local level.
The webinar ended with an intense Q&A session and discussion on the different points of view presented by the speakers and how the various approaches described could serve to support accountability and revenue generation at the local level for combatting inequalities. The issues and concerns raised included coordination between different governance levels, in particularly with respect to data collection and exchange, the involvement of national governments in improving local taxes, the issue of sensitising the public and the importance of awareness-raising campaigns for mobilising popular support for property tax reforms, tax-payers compliance, and criteria and political feasibility of exemption. The event showed the benefits of bringing the governance and tax communities together to discuss subnational revenue mobilisation.
Watch the recording now!