Commonwealth Local Government Forum

Local government finance

Resourcing local government remains a central challenge to effective decentralisation. This section has content relating to different models of fiscal decentralisation, options for identifying new sources of local revenue, such as local property tax; and strategies for improving collection and deployment of own-source revenue. It also offers information about improving the borrowing potential of local government, innovative financing models such as municipal bonds, shared services, and public private partnerships.



Determinants of property rate default: evidence from the Ashanti Region, Ghana

This study seeks to assess the determinants of property rates default in the Ashanti Region of Ghana. A multi-stage sampling technique was used to study 540 respondents from one municipal and five district assemblies within the region. A structured questionnaire collected data from the sampled respondents. Descriptive statistics (means, frequency distribution and percentages) and the probit regression model were then used to analyse the data with the help of SPSS and STATA respectively. The study found that most respondents who default are not aware of their obligation to pay property rates, and those who are aware fail to pay because they don’t know where to go to pay, or think the rate is too high. The study also revealed that a demographic characteristic such as income level, property value and property location influences rates of default. The study recommends raising awareness about the need to pay property rates and the penalty for any default.

Author: Dadson Awunyo-Vitor, Eric Oduro Osae, Sterling Donani Publisher: CLGF/University of Technology, Sydney Publication year: 2015

Property rating potentials and hurdles: what can be done to boost property rating in Ghana?

Population growth in many of Africa’s towns and cities has outpaced local authority capacity to provide efficient management, infrastructure and financing. There is already debate over the capability and capacity of urban local governments to provide basic services to a growing population, due to budget constraints and inability to raise the required local-level revenue. This paper looks at how the potential of property rating can be harnessed to generate the bulk of revenue needed for local-level development, despite the huge default rates across Ghana. Focusing on Wa Municipality as a case study, the study finds that the major hurdles to property rating are poor property data systems, political interference, non-enforcement of the law, low budget deficit in financing revaluation, insufficient staffing, and insufficient technical capacity of the few staff available at the municipal valuation and rating divisions. Despite these constraints, however, field data still indicates that property rating in Ghana, and especially in Wa Municipality, can generate up to 30% of local government revenue needed. This is conditional on streamlining current challenges and improving resources for the rating and valuation units. There is extensive non-payment of property rates in Wa Municipality due to lack of awareness of the purpose of this tax, of how to pay and of the penalties for defaulting payees.

Author: Elias Danyi Kuusaana Publisher: CLGF/University of Technology, Sydney Publication year: 2015

Constraints on property rating in the Offinso South Municipality of Ghana

The potential of property rate has been least tapped by decentralized governments in Ghana. This paper investigates the property rating system in Ghana through a case study of Offinso South Municipality (OSM). Questionnaires were used to gather empirical data from property owners in the municipality. The paper finds that there is inadequate property tax administration system and high public disdain for the property tax in OSM, with a significant association between compliance with the property tax and land use regulations in OSM. The paper suggests that the Offinso South Municipal Assembly (OSMA) should improve its land use planning system to facilitate voluntary compliance with the property tax. OSMA should also address accountability and transparency problems in the property tax system in order to increase public confidence in the tax regime. The OSMA should also improve on the property tax collection modes by computerising the billing and collection processes.

Author: Nicholas Addai Boamah Publisher: University of Technology Sydney Press Publication year: 2014

Local governments in Eastern Africa: an analytical study of decentralisation, financing, service delivery and capacities

This study commissioned joinly by CLGF, the UNCDF and the UNDP, provides a detailed analysis of the state of local government in Southern Africa focusing on four key thematic areas namely: decentralization; local government finance; inclusive service delivery; and related local government capacity. It is aimed at supporting the region’s efforts towards decentralized governance and local development.

Author: CLGF Publisher: CLGF Publication year: 2012

Mobilising sustainable local government revenue in Ghana: modelling property rates and business taxes

Property rates and business operating license fees constitute the major revenue sources for local government authorities. Accurate assessment of these revenues enhances the revenue base and effectiveness of their generation. Assessment of property rates and business operating license fees have been identified as one of the limiting factors that inhibit the revenue potential of local government authorities. Assessment must obey the principles of taxation such as efficiency, equity and fairness, adequacy, administrative feasibility and political acceptability. Over the years, the Sekondi-Takoradi Metropolitan Assembly (STMA) acknowledges that, it has had problems in ensuring equity and fairness in the assessment of property rates and business operating license fees. The paper reports on a computer modelling study carried out to introduce measure to ensure equity and fairness in assessing tax objects. A computer application has been developed with quantitative measures to evaluate and assess equity in tax assessment. A test run of the system has been successful and a pilot test is currently being implemented by STMA.

Author: Samuel B Biitir, John K Assiamah Publisher: CLGF/University of Technology, Sydney

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