The Ghanaian government is making progress towards new tax reforms involving the property tax rate and its timely collection.
Tax measures considered for the 2018 fiscal year include the improvement of property rate collection, among other major programs to be rolled out by the government such as tax relief for private universities, tax holiday for young entrepreneurs, and a proposed 13% reduction in electricity tariff for residential consumers.
The budget, dubbed the ‘Adwuma Budget’ focuses mainly on revenue mobilisation through strict tax collection modules and job creation.
Ghana’s tax authorities have largely neglected property income taxation. Enforcement of the tax has been weak, with property owners either not paying at all or deferring payment for years.
According to Citi Business News, property owners in Accra believe that there must be proper education around the topic of paying property tax, asking for a simplification of the system to make it worthwhile for the population.
Several respondents said they did not know the property tax rate value, but they were willing to pay.
During the 2018 budget statement, the country’s Finance Minister has announced new tax reforms for the coming year and encouraged Metropolitan, Municipal and District Assemblies (MMDAs) to mobilise revenue through property tax collection.
The reasons for the poor system implementation and the low rate of adoption given to the public are the insufficient capacity and high cost of valuation, as well as a meagre real property inventory and unskilled staff.
If properly managed, property taxes can provide significant revenue for the state. According to the budget, of the total domestic revenue generated and made up of Tax revenue, Non-Tax Revenue, and social contributions, non-oil tax revenue represents about 77%. It shows the major impact of expected improved tax compliance, including the property rate.
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