Prof Riël Franzsen presents keynote at African Property Tax Initiative (APTI)

Posted on June 20, 2018

Riël Franzsen attended the APTI conference, hosted by the International Centre for Tax and Development (ICTD) and the Direction Generale des Impots et des Domaines (Government of Senegal). The participants for this conference were primarily researchers and public officials from Africa and a number of international entities working in the area of local government revenue enhancement in Africa. Prof Odd-Helge Fjeldstad, an extraordinary professor at the ATI, also participated in this conference.

Riël Franzsen presented the keynote address at the conference, titled Challenges and prospects of property taxes in Africa. Recurrent property taxation faces many policy challenges such as inappropriate tax bases, base erosion through exclusions and exemptions, high transfer taxes, rapid urbanisation, low tax rates and lack of political support. Furthermore, the lack of skills and capacity to undertake regular valuations of all taxable properties, the lack of automation of administrative systems, as well as the lack of cooperation and/or coordination amongst government departments present further challenges to revenue enhancement. He advocated that governments should focus on improving collection, tax base coverage and valuation, preferably in that order. Without proper collection and enforcement, there is little to be gained from increasing the tax base and accurately valuing properties. Lastly he suggested that an area-based system with some adjustments made (to approximate value) could be more productive than a dysfunctional, out-dated value-based system.

Riël Franzsen also co-presented a paper, entitled The role of ICT in enhancing property tax in Africa: A tale of four cities, with Mundia Kabinga. This paper reported on the preliminary findings and conclusions of a research project on the use of information and communication systems in property tax collections in selected African cities. The researchers are Riël Franzsen and William McCluskey (ATI), Mundia Kabinga (University of Cape Town) and Chabala Kasese (Zambia Revenue Authority and former ATI MPhil student). The research was conducted in Arusha City Council (Tanzania), Kiambu County (Kenya) and Kitwe and Ndola City Councils (Zambia). The research indicates that in-house developed or “commercial off-the-shelf” ICT systems that are not integrated with central government systems are a common problem, although Tanzania started to address this problem through the national roll out of its Local Government Revenue Collection and Information System (LGRCIS). For local authorities to efficiently manage their property tax assessment and collection, as well as other own source revenues, there is a case to adopt a uniform system such as Tanzania’s LGRCIS. In contrast, Kenyan county governments are free to develop or procure their own systems. This fragmentation of systems creates problems in standardised reporting to national government and compatibility with Treasury.  A uniform national system has some benefits, such as cost effectiveness in technical support as well as consistency and standardisation of training and capacity building. It also allows for the moving staff from one local authority to another without retraining. Anecdotal evidence from Arusha and Kiambu suggests that taxpayer trust and voluntary compliance increases with automation and especially with the issuance of computer-generated receipts.

In his presentation on the relationship between central and local government in the context of local own-source revenue, Odd-Helge Fjeldstad used Tanzania as a case study. He indicated that all local revenue sources have now been centralised in Tanzania and the promising results from the LGRCIS system, especially in Arusha, have been completely negated by this policy change.

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