The myth of property taxation management in Africa: Reflections and lessons from Tanzania

Maingu Samson Mwigamba; Balozi Morwa

doi:10.51867/ajernet.7.3.65

Authors

Maingu Samson Mwigamba Department of Accounting and Finance, Catholic University of Mbeya, Tanzania https://orcid.org/0000-0002-3104-0502
Balozi Morwa Department of Business Studies, Catholic University of Mbeya

DOI:

https://doi.org/10.51867/ajernet.7.3.65

Keywords:

Ability to Pay Theory, Africa, Property Taxation, Tax Compliance, Tax Revenue, Tax Valuation, Tanzania, Allingham-Sandmo Theory

Abstract

Africa has a lot of unrealized potential for property taxation as a reliable and fair source of public revenue. The central myth about property taxation in many African nations is that they may be easily tapped to become a significant source of funding for both local and national governments. Although official records often highlight property taxes as a reliable source of income, the reality is quite different. The study employed data collected from many sources throughout several fieldwork trips and was based on a survey research design. Documentary review technique was used to gather secondary data. Applying the Ability to Pay Theory and An Allingham-Sandmo Theory reveals that taxpayers will be willing to pay taxes to authorities since they are aware of, and capable to, pay the taxes; and if the risks of detection and the costs of incompliance are high enough to outweigh the benefits. The study's findings showed that property taxation in Tanzania only contribute a small amount of revenue. Low rates, inadequate valuation techniques, enforcement issues, and public awareness are the primary barriers to Tanzania's property taxation revenue realization. To overcome these challenges, comprehensive improvements in property valuation, a gradual increase in tax rates, enhanced enforcement strategies, and increased public awareness of the benefits of property taxation for national growth are all required. The report concludes that, to solve the problems with Tanzania's property taxation management, legislative changes are inevitable. The study recommends to establish a special authority to manage all property taxation-related issues which can be known as The Real Estate Authority of Tanzania (REAT). This will ensure that all property transfers, purchases, and leasing agreements will be registered with REAT so that the appropriate taxes are paid. REAT will be responsible for property registration, valuation, and creating taxpayers’ awareness on property taxation.

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