Re-centralizing the Administration and Management of Property Rates: Will it Improve Collection?

Abstract

For almost a decade, property taxation reform revealed as a matter of concern in Tanzania. This reform merely seeks to improve collection of proceeds from rateable properties via re-centralization of powers and functions pertaining to the administration and management of property rates from local government authorities to central government agency. The Financial Laws (Miscellaneous Amendments) Act, 2008 created agency contract between Dar es Salaam Region Municipal Councils and Tanzania Revenue Authority. This reform, however, could not attain the desired end since collection remained dormant and sometimes, declined regardless of the increase of rateable properties in the valuation roll leading to the amendment of the law to re-bestow such powers and functions to local government authorities. The Finance Act, 2015 introduced another reform that empowered all local government authorities to collect property tax. Just a year following that amendment, The Finance Act, 2016, re-centralized back administration and management of property tax to Tanzania Revenue Authority. This paper documents first, re-centralizing property rates does not promote decentralization by devolution policy and thus, constrains fiscal autonomy of local governments. Second, it will probably, not work to the expectation of the centre as Tanzania Revenue Authority has insufficient capacity in terms of personnel comparing the area of whole local government.

Keywords: Re-centralization, Property Rates, Administration, Management, Collection