1.1 Improving Property Tax Collection

development and extension, water management and irrigation, market connectivity, among others) can yield massive dividends. Additionally, evidence shows that repurposing public spending for investment in productivity-enhancing and emissions-reducing technology in agriculture and food systems can help accelerated the economic transformation of countries in the region.21 Section 2 discusses more extensively the policies needed to seize opportunities in agriculture and food systems amid turbulent times.

BOX 1.1: Improving Property Tax Collection Taxation of land and property provides an effective mechanism to support local governments worldwide. In industrialized countries, revenues from property taxation constitute more than 2 percent of GDP, but only 0.6 percent in developing countries and much less, 0.38 percent of GDP, among African countries.a Adopting digital technologies would help diversify tax collection, and hence improve public revenues. This box highlights success stories at the local and national levels. Global evidence suggests that cross-country differences in property tax collection can be attributed to: (i) broad coverage; (ii) digital record keeping that maximizes interoperability, facilitates updating of records, and allows regulatory oversight; (iii) transparency through public access to registry data; and (iv) integrated workflows to support record updating and tax enforcement. If African countries could overcome these four factors, they could generate incremental revenue of US$60 billion annually for the continent.b c There is growing evidence of successful reforms in Sub-Saharan Africa at the city level. For instance, revenue was enhanced through regular supplementary valuations, capturing new high-value construction in the tax base in Kitwe (Zambia). The creation of the Kampala Capital City Authority (Uganda) provided political and institutional support to property tax collection. Investments in technology and skills to introduce a computer-assisted mass appraisal (CAMA) system in Cape Town (South Africa) facilitated the valuation of more than 800,000 properties in three-year cycles, with few objections on property values from the owners. In Tanzania, the Local Government Revenue Collection Information System (LGRCIS), developed with the support of the World Bank, has helped increase revenues from property tax (and other sources) in cities like Arusha.d The state of Lagos (Nigeria) has undertaken reforms including the development of a comprehensive tax map and digital records, and 13 other states in Nigeria are learning from its experience to develop their own tax maps and GIS centers as springboards for digital fiscal cadasters. e While these reforms at the sub-national level have been successful, they are not enough to push the country’s collection to exceed the average for developing countries (0.6 percent of GDP); except for South Africa.

21 Relative to a business-as-usual scenario, repurposing public spending toward green innovation will boost global real income by 1.6 percent over the next two decades. It will also cut emissions from agriculture by more than 40 percent (Gautam et al. 2022).

At the national level, successful reforms were undertaken in South Africa and Mauritius. These two countries implemented reforms in all key areas including completing and updating tax maps and valuation rolls; and digitizing both their fiscal (tax) and legal (land registries) cadasters, inter-linking them and availing them to the public.f Mauritius’s Land Administration, Valuation, and Information Management System (LAVIMS) has improved access to information for all its departments and created a complete and up-to-date national valuation roll. In South Africa, the modernization of fiscal and legal cadasters has been driven by municipalities in cities and towns, led by Cape Town, with development of advanced systems for the fiscal and legal cadaster including for valuation with sophisticated approaches for CAMA, the first in Africa. Finally, recent technological development boosts the collection of property taxes. Progress toward achieving this goal requires two broad measures: (1) strengthen reforms at the subnational levels, where property taxes are mostly administered in Sub-Saharan Africa—including completing and keeping updated tax maps and valuation rolls, and digitizing fiscal cadasters and linking them to the legal cadasters in land registries; and (2) strengthening national-level support to subnational tax administration entities in legal, institutional, and technical areas while also continuing the drive to digitize land registries.g

a, d, f Franszen and McCluskey (2017). b, g Deininger and Goyal (forthcoming). c, e Deininger, Awasthi, and McLuskey (2021). f Deane, Pattison, and Luchoo (2016). BOX 1.1 Continued