Situations such as what we find ourselves in as a country, at this crucial moment of global uncertainty, is the reason why proper management and efficient use of our economic resources should always matter. At no point in the use of economic resources should its proper management and efficiency be undermined. The management of the economic resources of this country must not at any point in time be compromised, because it will come to haunt us at some stage.
There is a need to effectively manage the huge potential in revenue that can be generated from property rates in the country. Revenue from property rates, both residential and commercial, can be very huge and can enable the government to take care of some of our teeming challenges. There are millions of property in Ghana, and several other thousands under construction at various stages of completion. Government can rake in millions of cedis from taxing property owners at a reasonable rate to help it undertake its developmental programs. The Ghana Statistical Service estimates listed structures at 10, 661,421, according to data obtained from the 2021 Population and Housing Census.
Currently, residential properties are classified into 1st class, 2nd class and 3rd class. First class properties are valued higher than 2nd class and 3rd class properties. The value of a property can only be determined by experts or professional valuers. The Land Valuation Division of the Department of Lands Commission is tasked by government to value all property in Ghana.
The Local Governance Act, 2016 (Act 936) gives MMDAs the authority to levy sufficient rates to provide for the total estimated expenditure to be incurred by the District Assembly during the period in respect of which the rate is levied.
The property rate is charged on a portion of the estimated value of the property called the rateable value. The Local Governance Act, 2016 (Act 936) defines the rateable value of a premises as the replacement cost of the buildings, structures and other structural development that comprises the premises after the deduction of the amount it would cost at the time of valuation to restore the premises to a condition in which they would be as serviceable as they were when new.
All MMDAs in Ghana have been authorized to collect property rates on behalf of the government. Depending on the size of the MMDA and how populated it is, there could be several properties within its jurisdiction, comprising of residential, commercial and mixed-use properties.
In most MMDAs, property rate performance is quite poor, in terms of assessment, compared to other similar non-tax revenues. Why is this so? This is attributable to several factors. Revenue collection from property rates is fraught with individualism, selfish ambitions, malpractices, laziness, and recalcitrance, lack of accountability and transparency, and objectivity.
How do we all get involved in this exercise to make government realize the expected revenue from property rates? In my opinion as a professional, objective and concerned citizen, I believe government should engage additional hands to complement the current capacity. I must confess that most of us who are aware of the current state of affairs, with regards to property rates were jubilant when the Minister of Finance announced in the 2022 budget government’s intention to outsource property rates.
However, we felt a bit let down when government decided to abort the idea. Thankfully it appears government is finding an alternative approach to solving this conundrum. Government needs financial resources and must not compromise on theatrics to deny the citizens of this country the needed revenue for development.
The Local Governance Act, 2016 (Act 936), Section 146 (subsection 8), states that the Minister shall in consultation with the Minister responsible for valuation cause to be determined by the Lands Commission or by a valuer appointed by the Lands Commission, the rateable value of premises and may cause a valuation list to be prepared for each district.
Therefore, the government should commit adequate resource into undertaking this important exercise. When properties are valued, determining their rateable values become easy. It also minimizes confusion in acceptance of rates by property owners. The Assembly is able to estimate the value of properties within its jurisdiction for revenue purposes. Accurate data on properties can also serve varying purposes to the Assembly and the nation at large.
I cannot talk about revenue generation and properties without mentioning Information and Communication Technology. ICT is crucial in gathering data, valuing properties and providing accountability. Government must ensure that every stage of this exercise is integrated with ICT. ICT should be employed in identifying and valuing properties, generating maps and block plans, preparing bills, distributing bills and finally collecting moneys. When the right data is gathered using ICT, every stage of the work will be easier and subsequent activities will be less stressful to undertake.
So, what can be done to improve upon the current underwhelming performance of revenue from property rates? Why must government stop ignoring the potentially huge revenue source such as property rates?
First, government must provide adequate resources to the Land Valuation Division, to team up with MMDAs to value all properties in the country. The valuation of all properties must not necessarily be completed before the MMDA can assign rates on properties. The MMDA can generate bills for properties that will be valued on time to meet the preparation of the Composite Budget. All materials relevant to facilitate the preparation and distribution of bills – including Maps, Block Plans and Valuation Lists must be made available to the MMDA by the Land Valuation Division.
Secondly, Government’s collaboration with GIZ has been generally fruitful, and this can be continued with the organization providing the needed determination and generation of bills, Maps and other important details. The work of GIZ has made preparation of bills less hectic. Therefore, in the revision of government’s plans billing is not going to be difficult once the MMDA is able to agree on the criteria for billing within its area of administration.
Thirdly, government must ensure that bills are printed and distributed on time. Currently the law permits bills to be distributed by the 31st of December of each year and payment is expected to be done within 3 months. The printing and distribution of bills is fraught with lots of inefficiencies. There is no properly defined approach to distributing the bills. In my opinion, bills distribution must be assigned to a team of personnel who can easily use basic ICT equipment on the field. The current software designed by GIZ requires that bills distribution goes with identification of properties using a special location tracker. People who can easily use mobile phones or other devices that run the software must be employed. These people must also be energetic men and women who can quickly distribute all the bills within a given time frame. When the right personnel are recruited, it can take just 20 of them to distribute about 20,000 bills within two weeks maximum.
During revenue collection, after successful distribution of bills, revenue collectors must be properly supervised, monitored and appropriate feedback taken to improve the system. If proper monitoring is not done during collection, government will continue to lose a lot money and the whole exercise will be in futility. Revenue collection is a very crucial stage in this whole exercise. There should be no compromise on accountability. Officers charged with the responsibility of ensuring that the MMDA undertakes a value for money exercise must ensure payments are done promptly and appropriate receipts issued to rate payers. There should be regular and random checks to ensure that malpractices in property rate payments are eradicated.
Enforcement of rate payments cannot be overlooked if Government is to benefit from the exercise. Recalcitrant rate payers must be arrested and prosecuted to serve as deterrent to several others who have refused to pay their property rates over the years. There should be no political interference in determination of property rates. This is one area that must be looked at, since most often owners of big property that can pay huge rates refuse to do so because of their political connections or influence. There should be regular education on the need for every citizen to pay their property rates as their share of contribution to national development.
The development of this country must be a shared responsibility. As citizens we have a duty to develop our country, and if paying property rates is one way to do so, then let us embrace it.
