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Property Taxation in Southern and East Africa: Lessons from South Africa and Kenya

15 March 2003   (0 Comments)
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Property Taxation in Southern and East Africa: Lessons from South Africa and Kenya


Over the years the ability of local authorities in many countries in southern and east Africa to direct and sustain urban development in their respective areas of jurisdiction has declined.Urban management tends to be little more than an academic exercise and urban service delivery is in many instances in a state of disarray.Countering this downward spiral requires financial stability, which, in turn, implies good governance and an improved and sustainable flow of revenue.Property taxation is widely viewed as a necessary instrument in any strategy to enhance local revenues and so to ensure more efficient urban land management and service delivery.But attempts at introducing or reforming a property or land tax regime in many African countries have until now met with limited success.

Despite the fact that many countries in southern and east Africa have along history of using property taxation (called `rating' in most former British colonies) as a source of revenue for local authorities, many policy and administration-related problems are still being experienced. In some instances these problems can be traced to the retention of inappropriate legislation enacted by former colonial powers, and the unwillingness of present-day governments to adapt these inept systems to the realities facing especially urban jurisdictions.We shall discuss in more detail South Africa and Kenya, probably the two countries with the longest history of property taxation in the region.

South Africa has experienced far-reaching local government reform since 1993.From a property tax perspective, the primary challenge facing government is to reform and extend the rating systems that functioned well in former white urban local authorities during the pre-1994 era to all urban and rural properties within the new, non-racial local government dispensation.A further important issue is achieving uniformity across a country where municipalities have for more than a century had the freedom to choose one of three possible rating systems.

Despite its significant contribution to local authority revenue, the operation of Kenya's rating system has been clouded by neglect and poor administration since its inception more than a century ago. Ordinarily, it would be expected that a responsible government would modify or reform its property tax in the light of the increased responsibilities and diversity of operations at local government level.In the case of Kenya,however, the rating system has not been improved substantively or administratively in any significant manner.

But before we discuss the particular issues facing South Africa and Kenya, we shall discuss some basic features of the property tax systems often countries in southern and east Africa in the context of the followingkey areas: coverage, tax base, assessment, tax rates, and collection and enforcement.

Source: By RCD Franzsen(University of South Africa), WHA Olima (University of Nairobi) SA Merc LJ

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