Ghana property tax system currently yields 0.5% of GDP
• A deputy governor is calling for a relook of Ghana’s property tax system
• Dr. Maxwell Opoku Afari believes an efficient tax system will rake in more revenue and increase GDP growth
• Ghana property tax system currently yields 0.5% of GDP
A first deputy governor of the Bank of Ghana, Dr. Maxwell Opoku Afari, has called for a relook at Ghana’s property tax system.
According to him, the system is currently yielding only 0.5% of the country’s Gross Domestic Product as compared to that of OCED nations which is at 3 percent.
Delivering a public lecture organised by the University of Ghana Business School, Dr. Opoku-Afari said this was unacceptable and therefore called for a more efficient tax system to collect taxes from residential and commercial properties.
“Another area is the need to devise more efficient means of collecting property taxes on residential and commercial properties in the country. Property tax collection in Ghana is administered by local government authorities, but hampered by lack of proper records and ineffective collection efforts.”
Comparing the situation in Ghana to other African countries, he noted that property taxes raised in many African countries are estimated to be less than 0.5 percent of GDP compared to 3 percent in OECD countries. He added that Mauritius has made progress in boosting revenue from property taxes, compared to most African countries.
“However, the fast-growing real estate sector has the potential to boost domestic revenue mobilization if efficient collection means are deployed to realize maximum taxes. The appeal of property-related tax is that property is not easily hidden from tax authorities and also often has sufficient benchmarks for valuation purposes,” the BoG Deputy Governor said.
Dr Afari said Mauritius was in 2018 collecting 4.9 percent of its revenue from property taxes which was significantly higher than the African average of 1.6 percent and close to the OECD countries’ average of 5.3 percent.
“The prominence of property taxes in Mauritius stems from the multiplicity of property taxes in line with the various phases in the value chain process, and these taxes are levied and collected at the national level. These include land registration duties; land transfer taxes; capital gains tax; taxes on the transfer of leasehold rights in state land; stamp duties; among others,” Dr. Afari said.
He urged that Ghana learns from Mauritius and ensures that “we reap appropriate revenue on our assets. And the recent initiatives by the government to introduce the Ghana Card, the Digital Address System, and the Digitization of the Land Registry provide the needed framework to achieve this objective.”