Home » Property Tax Administration in Ghana: Should Central Government Takeover Collection?
Africa Business Global News News

Property Tax Administration in Ghana: Should Central Government Takeover Collection?

Property tax, mostly referred to as property rate, from time immemorial, has been considered a significant source of revenue for public administration. 

It is considered the oldest form of tax in history (Carlson, 2004). The payment of taxes in Ghana predates the emergence of Europeans. Before the attainment of independence in Ghana in 1957, property tax in the then Gold Coast was known as “Ntokuaa tuor” (Ayamga, Perprem & Atampugre, 2018).

“Ntokuaa tuor” translates literally in the Akan Language as ‘window tax’. The tax traces its name to how it was calculated and administered.

The amount of tax one paid depended on the assessment of the number of windows one had on one’s building.

Those who had huge buildings would have more windows than those with small buildings and that translated into higher taxes for people with big buildings.

The tax was intrinsically unfair. As noted by Adem and Kwateng, (2007), the system was not fair because some citizens with large houses may pay less tax because their houses might have fewer windows and those with small houses but have plenty of windows may be forced to pay more; hence, the system did not conform to equity.

Brief history of property tax in Ghana

In 1951, a Municipal Council Ordinance was promulgated with the establishment of four (4) municipalities, namely Accra, Cape Coast, Kumasi and Sekondi-Takoradi. These municipalities were clothed with the power to impose rates on buildings with an annual rental value of not less than six pounds (Petio, 2013).

When Ghana gained independence in 1957, it sought the assistance of the United Nations (UN) to develop a uniform, equitable and sustainable method of property rating.

The UN responded positively and a system based on taxing each property according to its replacement cost was recommended and adopted (Kusaana, 2015). The tax structure has since undergone several changes.

In the early 1980s, many underdeveloped and developing countries were faced with severe economic hardships and had to undergo socio-economic and political reforms to be able to secure the support of the Bretton Woods Institutions.

Several attempts were made by countries to transition from despotic rule into a democracy. Ghana was no exception.

According to Appiah-Kubi (2004), Ghana embarked upon a reform of its tax regime within the framework of its Economic Recovery Programme, which was introduced in 1983.  

Ghana initiated steps and consolidated processes to decentralise its political and administrative machinery.

The passage of the PNDC Law 207 in 1988 commenced the decentralisation process by conferring on local governments the mandate to levy and collect specific taxes, including property tax.

Mandate of Local Governments(District Assemblies) in Ghana

Article 245(b) of the 1992 Constitution of Ghana states that Parliament shall, by law, prescribe the functions of District Assemblies, which shall include the levying and collection of taxes, rates, duties and fees. Section 12 of the Local Governance Act, 2016 (Act 936) spells out the functions of a local government (district assembly) to include political and administrative authority, overall development of the district, mobilisation of resources necessary for the overall development of the district and the provision of municipal works and services in the district. 

The transfer of functions, powers and responsibilities from the central government to local government units must be accompanied by resources.

As the maxim goes, funds must follow functions. Article 240(2c) mandates the State to establish for each local government unit a sound financial base with adequate and reliable sources of revenue. Section 145(1) of Act 936 places a duty on district assemblies to levy sufficient rates to provide for the total estimated expenditure to be incurred by the district assembly during the period in respect of which the rate is levied.

The Act defines a general rate as a rate payable by the owner of premises within the district on the rateable value of the premises or a rate assessed on the possessions or any category of possessions of persons who reside within the district. Property tax in Ghana is administered basically on an annual value system.

In addition to central government transfers such as the District Assemblies Common Fund (DACF) to local governments, the imposition and collection of property tax by local governments are one of the avenues for revenue mobilization in their jurisdiction.

Besides the legislative imperative to establish a sound financial base for local governments, the broad economic principles that largely influence the tax assignment mix between central and local governments indicate that taxes on relatively immobile goods and inputs, levies and fees based on the benefit principle, should appropriately be the responsibility of the local government (Mann, 2001).

Again, the principle of subsidiarity holds that a larger and greater body should not exercise functions which can be carried out by one smaller or lesser but that the former should support the latter and help to coordinate its activity with the activities of the whole community (Mele, 2004). 

Administration of Property Tax in Ghana

The collection of property tax is done on an annual basis. Every local government is expected to have a Rate Assessment Committee, made up of officers usually from the Budget, Revenue and MIS office, responsible for all matters related to property valuation, billing and collection of the tax. Oftentimes, the local government through public-private partnership (PPP) outsources the assessment and collection to private firms.

At other times, an ad hoc task force is constituted to assist with the collection. Billing, after the valuation exercise has been carried out, is done very early in the year. Citizens (i.e. taxpayers) living within the jurisdiction of the local government have 10 days to make payment upon receipt of their bills. Within 10 days, the taxpayer must either pay the full tax, make arrangements to pay by instalments or apply for a review of the assessment.

Should the taxpayer fail to pay the rate due, the district assembly is required by law to send the taxpayer a demand notice in writing, by registered letter, or cause the notice to be affixed on a conspicuous part of the premises in the absence of a postal address.

This demand notice may also serve as a threat of an impending legal proceeding for the sale of the premises to defray the amount due, should the taxpayer fail to pay the tax. If the amount due in respect of any premises is not paid within a period of forty-two days, the district assembly may apply to a court for an order for the sale of the premises.

However, if at any time during the court proceedings but before the sale of the premises or property, payment of expenses properly incurred and the amount due is made, further proceedings shall cease.

Factors militating against the collection of Property Tax

Increasing population and the onset of urbanisation imply an increase in the number of buildings, which should ordinarily translate into more revenue for local governments.

Despite the favourable increases in the tax base due to the factors of urbanisation and the fact that property tax is considered a sine qua non to robust local finance, payment of the tax has declined in real terms while its importance only exists nominally. Key challenges confronting the administration of property tax include:

•    Lack of expertise

Conspicuously absent at local governments is personnel with the requisite qualification and knowledge to undertake the assessment and sometimes billing of a property.

The lack of personnel with the right technical expertise in addition to requisite logistical support within the district assemblies has resulted in a high degree of discretion and the use of arbitrariness in arriving at an amount to be paid. 

According to Appiah-Kubi (2004), discretion has led to wide differences in rates for properties among local assemblies and even in the same assembly. 

•    Poor property registry system

The success of every tax regime is dependent on its administrative machinery. In Ghana, local governments have not been able to develop an efficient and watertight cadastre to be able to properly determine the value of property and bill as appropriate. There is close to no accurate data on property within the jurisdiction of local governments.

Even when data exists, it is either archaic or not comprehensive. Property rate in Ghana has been characterised by outdated valuation lists, and complex and defective value assessments and methodologies (Kuusaana, 2015).

As indicated by Appiah-Kubi (2004), the absence of assessment tools has consequently resulted in unsystematic valuation and inequity in the property tax regime.

•    Lack of funds

Lack of funds constitutes a major setback for local governments’ inability to mobilize enough revenue from property taxation.  For most district assemblies, it underpins their inability to undertake periodic property valuation and reviews to reflect changes in property market values, and the wherewithal to acquire the services of professional valuers.

Delays in tax bills to property owners are partly a consequence of the lack of funds to provide the logistics for distributing bills to taxpayers.

•    Correlation between tax and development

Taxes are primarily taken to initiate development activities. According to Bird and Slack (2007), the main purpose of levying property tax is to enable local governments to provide social services for communities.

If citizens are unable to appreciate a comparative improvement in the level of development in their communities despite their taxes, apathy sets in and they refuse to continue to pay.

Ayodele (2006) also notes that taxpayers see tax collectors as corrupt, hence paying property tax is a form of helping tax collectors and politicians to enrich themselves. 

•    Lack of community participation in revenue utilisation

Citizen participation is key to the payment of property tax. Local governments are mandated by law to engage their citizens in the decision-making processes regarding development in their area of jurisdiction.

However, citizens consider the processes leading to the design of the tax as exclusionary. When citizens are properly engaged, developments carried out by local governments meet the desires and aspirations of citizens.

In contrast, citizens are more likely to abstain from the payment of taxes if the development trajectory of their area hinges on the whims of political leaders or duty-bearers without recourse to the needs of the people. The relevance of citizen participation is often underestimated

•    Lack of education

Many citizens do not see the need to pay property rates. Property tax in the view of a taxpayer is considered nuisance tax.

In addition to the laborious processes accompanying the acquisition of building permits, Ayodele (2006) observes that some taxpayers perceive property tax as a cheat in the sense that individuals acquire their own land, buy expensive building materials and then a local government decides to tax the building. Some consider it a disincentive to even acquire property.

Central government and property rate collection

Having observed the challenges encountered by local governments in Ghana in the administration of property taxes, one is tempted to quickly shift the assignment of property valuation, billing and collection to the central government because it has the capacity and ability to pool together the requisite logistics and human resource to harness the full potential of property taxation.

Again, the central government has the administrative and legal muscle to ensure compliance; something that is not readily available to local governments. 

Despite the above, it is not for nothing that the collection of property taxes has been vested in local governments.

It constitutes a major source of funding which should not be taken away from them. If property tax were efficiently administered, the tax could enable local governments to improve their provision of basic services to the community. 

The quest by the central government to suddenly veer into the area of collection of property tax is problematic and a major setback for local development.

Based on the principle of subsidiarity as espoused earlier, the expectation is that the central government should not attempt to arrogate to themselves the responsibility of valuation, billing and collection of property tax.

Instead, the central government should collaborate with local governments to provide logistical and technical assistance where there are constraints, especially in the area of data (cadastre development), valuation and billing.

Section 146 (8) of the Local Governance Act, 2016 (Act 936) clearly spells out how the central government can foster partnerships with local governments and provide them with technical backstopping. Section 146 (8) stipulates that “The Minister shall in consultation with the Minister responsible for valuation cause to be determined by the Lands Commission or by a valuer appointed by the Lands Commission, the rateable value of premises and may cause a valuation list to be prepared for each district”.

Clearly, the framers of the Act envisaged and considered the resource deficit in terms of logistics and human resources at the local level in arriving at this provision. To therefore take up the collection of this particular tax to increase the central government revenue base is disingenuous and does not augur well for local development.


Ghana has come a long way to step back into recentralizing key revenue sources of properties, billing and collection of property taxes can be easily surmounted if the central government resorts to efficient and transparent partnerships with the local governments. 

The government’s digital transformation initiative is a starting contribution towards achieving the full benefits of property taxation.

The street naming and addressing system, linking all identification cards into a single identification card, the sim-card reregistration and various seamless online payment platforms are a perfect starting point.

All of these, in addition to various information technology (IT) tools and the building of the capacity of local government staff responsible for rate collection on how to use such tools.

A very significant task will be to embark upon intensive education and awareness campaigns to sensitize citizens on the importance of paying their property tax and its consequent benefits to them and the community. 

Above all, duty bearers at the local government must ensure transparency in the accountability processes of revenues that will accrue from property taxation.

Citizens must also be engaged throughout to ensure inclusion and a sense of responsibility. Additionally, revenue generated from property taxation must be linked to service delivery for citizens to better appreciate their contributions to development.

Source : Graphic