Until recently, the mandate to administer property rate and its collections was assigned to the Local Authorities/Municipalities. The property rate administration, collections and compliance have posed enormous challenges to these Local Authorities. Undoubtedly, each of them will have their own story to share. Although these Local Authorities perceive this “elusive tax” as the largest source of revenue for social and economic development, the question remains if they have effectively managed the administration of this tax and the collection thereof to yield the expected results.
With effect from January 1, 2023, the Ghana Revenue Authority (GRA) partnered with the Metropolitan, Municipal and District Assemblies (MMDAs) to collect property rates using a Unified Common Property Rate Platform. The Unified Common Property Rate Platform, also known as “myassembly.gov.gh”, is a complete end-to-end district revenue collection and administration platform designed to enhance the collection and accounting of property rates. It is also linked to the Ghana.gov.gh payment platform.
Undoubtedly, GRA is already stretched with its legally mandated obligations, such as monitoring, collection, and enforcement of non-compliance with the mainstream taxes which go into the consolidated fund for the country’s development. A major concern is whether the new role of GRA was created because of perceived inefficiencies and the inability of the municipalities to collect these taxes, thus triggering the government to take over the collection of this untapped source of revenue.
This article focuses on the major stakeholders—the MMDAs, GRA and the Property Owners/Ratepayers. An attempt will be made to understand and appreciate the various roles and responsibilities expected from each category of stakeholders.
What was the purpose of this rate, and why were the Local Authorities assigned to handle its administration and collections?
The purpose of the rate, as stipulated in the Local Government Act, 2016 (Act 936), was to empower the Local Authorities in their revenue generation, provide for local governance funding, establish equity and fairness, assist in local economic development, and have ultimate control over its compliance and administration.
The payment of these taxes by ratepayers goes to finance the services of the local government, i.e., to support public schools, fire and police protection, garbage disposal & waste management, public libraries, provision of recreational parks, streetlights, sewer systems and many more local services. It is, therefore, no doubt that property rate payments go a long way to uplift the developmental programs in the community. Nevertheless, are these collected taxes used for the intended purpose, and why should one continue to pay them when the social and economic benefits appear insignificant?
The framers of Act 936, we believe, saw fit that since property rate is a community-based tax, the Local Authorities should have the autonomy over the administration and collection of these taxes to support the local communities. In addition, their role was to act as the custodian of the tax since they were closer to the local community and better understood the local needs, priorities, and property market dynamics, where the residents could engage directly with their elected officials regarding property rate matters. We also believe that the tailored tax policies and local service delivery would allow the Local Authorities greater financial autonomy and the ability to respond to local needs and priorities effectively.
Unfortunately, these Local Authorities have faced many challenges regarding updated valuations, misleading data management, compliance and enforcement, tax base expansions, public awareness & engagement, capacity & resources, and political policy challenges. These challenges highlight the complexity of property rate administration and compliance for the Local Authorities.
For any municipality to overcome these challenges, specific steps need to be taken—appropriate investment in systems, capacity building, stakeholders’ engagement, and continuous improvement in the administration process. Indeed, the responsibilities of the Local Authorities are overwhelming, and the growth of towns and cities resulted in population expansions which often translates into an increase in demand for housing and other municipal paid services. It is then essential that property values be kept current to meet these exigencies. Whether the Local Authorities carried out their mandate efficiently and effectively becomes another question for the government. Could they have reviewed the obsolete policies which made their work most difficult to reach their targets?
As indicated, GRA coming on board as collection agents for the municipalities was with mixed feelings among all stakeholders. The ratepayers, who should have been considered the ‘revenue clients’, were completely ignored when such major decisions were being made. Remember that property values are not absolute; the values keep changing with varying situations, ultimately hindering any municipality’s budgeting. One would have assumed that the ratepayers would at least be consulted for such a significant policy shift.
The ratepayers we presumed are even more confused than ever. Which designated authority do they contact to address their assessment issues regarding their rate bill? Most of the populace are equally confused about where and how to address assessment-related issues. It is highly probable that 9 out of 10 ratepayers do not know how the rate impost (tax rate) is derived and its subsequent impact on the property rate bill.
Now that GRA has taken over the collection of rates for the municipalities, are they bound to face similar challenges as experienced with the Local Authorities? Would the same statutory provision bind GRA as in Act 936 as the sole agent of collections, or is this simply an entirely separate arrangement with the municipalities? Which accounts would the GRA deposit the property rate proceeds into, since, by law, GRA is supposed to make all deposits into the consolidated fund for national development? How would the disbursements be carried out so the Local Authorities can expeditiously fulfil their mandated obligations? These are just a few questions that GRA needs to address to the public properly.
Some challenges we foresee GRA facing are coordination with the Municipalities, data accuracy & property valuations, compliance and enforcement, capacity & resources, and political & policy considerations. Let us assume there is a change in government. Would the new government in power appreciate the existing role of GRA in their collection efforts, or would they rush to seek the necessary amendments to reverse the role of the municipalities?
In all this, what are the benefits for the property owner or the ratepayer? The good news is that the ratepayer should pay particular attention to the assessments levied on their property. By law, only the rating division of The Lands Commission is charged to carry out property valuations for rating purposes; no other authority has the mandate to undertake this exercise, and they tax as closely as possible to current market values. The ratepayer has the right to contest any new assessment, and if it results in a property rate reduction, one can request a revised bill, refund, or apply the overpayment to the next property rate bill. Property record files should be examined regularly to determine if a property has been over-assessed and if that over-assessment can be effectively challenged. Assessing authorities have been known to make mistakes for better or for worse.
There are five (5) circumstances in which one can have substantial evidence for a compelling case:
- If the property assessed value is too high. i.e. your assessed value is at a higher percentage of value than the assessed value of other identical or similar real property on the valuation roll.
- If there is an illegal assessment. Check to see if your property is assessed at a higher percentage of value than the law allows.
- If there is an unequal assessment. This is when the property is valued over its market value. It is illegal for a property to be assessed under the percentage of the market value, and it is unequal if it is greater than the market value.
- If there is an error on the property record file since errors are notoriously common. Another common mistake that occurs is when a property has been classified incorrectly.
- Exemptions or deductions allowed on property; typical values for expected vacancies; depreciation; functional obsolescence making a property less desirable to own; and so on.
If you fit into any of the five categories, you have a reason to put together a case and appeal your assessment value. Generally, if the above steps find a clear and significant disparity between the market and the assessed value, presenting the facts to the assessing authorities is likely to reduce the assessed value.
For a considerable number of years, the Local Authorities have tried their hands on this “elusive tax system”, but this has not yielded the desired results one would have expected in the local communities. Perhaps, GRA should be allowed to come on board to assist with the rate collection efforts for the municipalities. We believe that the GRA can leverage its existing infrastructure and expertise in tax collection to streamline the process and ensure more timely and accurate payments. In addition, there could be uniformity, standardization and reduced administrative burden.
So, what is the way forward for GRA to succeed in this regard?
- Setup coordinating systems with Municipalities – The first thing we believe GRA should do is to set up an efficient coordinating system with the various Municipalities and the Valuation Authorities. A clearer understanding should be established that they are not to take their mandate away from them but only to assist in the rate collection efforts so the communities could be empowered to develop rapidly with changing times.
- GRA must clearly outline the changes – It is crucial for GRA to outline the specific changes in their new role as collection agents for the municipalities: the revised payment system which will be adopted, updated deadlines, or any other relevant procedural changes. GRA needs to educate the public, or ratepayers, on how these changes aim to streamline the process to enhance transparency and improve compliance.
- GRA to address non-compliance & penalties – The need to explain the consequences of non-compliance, any penalties or late fees that may be imposed on the ratepayer whilst encouraging them to fulfil their obligations promptly to avoid any negative repercussions.
- GRA to address FAQs & concerns – GRA should provide a platform to address questions and concerns that property owners may have regarding the new system. Again, we believe this would provide clear, concise answers to alleviate confusion or apprehension.
- GRA must promote awareness and education – The need to provide contact information for the GRA or relevant authorities where ratepayers can seek further information or clarifications. This may include helpline numbers, email addresses or the designated offices for ratepayer support.
In conclusion, the complexity of property rate administration and its collections should not rest on just one person’s shoulders. As much as the rate payers wish to be on the back bench, they play a major role as responsible citizens in supporting local development through timely payment of the property rates. On the other hand, the Local Authorities should maintain a strong commitment to accountability, responsiveness, and public engagement, thereby building the necessary trust among property owners.
There is no doubt that the rates would have a positive impact on the community. With all stakeholders prepared to work together whilst embracing their respective roles responsibly, the communities stand a greater chance of developing. GRA, we wish you luck!
The Writer is a Property Tax Specialist with Auditel International (Gh) Ltd/Member of AGI.
Email: [email protected]
