Property tax reform for local government revenue mobilisation in sub-Saharan Africa

Property tax reform for local government revenue mobilisation in sub-Saharan Africa

To ensure sustainability and accountability of financing the Sustainable Development Goals and challenging infrastructure needs, developing country governments and development partners are looking at a range of measures to enhance domestic revenue mobilisation. One of the measures that is often cited, especially as a source of local government own revenue is property taxation. This paper aims to provide an overview of the features, advantages and challenges of operating a property tax.

With reference to two case studies from DFID and World Bank programmes, we share lessons from Adam Smith International’s experience of assessing and implementing property tax reforms. Why is property taxation important to Sub-Saharan African countries? Tax systems that raise more from direct taxes tend to be more equitable, since the wealthy will be taxed more than the poor or those without any assets (Moore et al, 2018). With economic and population growth, and greater demand for housing and urban development, land values are rising, especially across the African continent. In Nairobi, for example, land values have increased six-fold since 20075. Capturing gains in land value may be a key strategy for local governments to finance much-needed infrastructure investment and public service delivery