Designing a Valuation System for Property Tax: The Case of Zanzibar, Tanzania

Sung-Hoon Kang and Bong-Joon Kim
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Sung-Hoon Kang: Department of Policy Studies, Hanyang University, 509 Multidisciplinary Lecture Hall, 222 Wangsimni-ro, Seongdong-gu, Seoul 04763, Korea
Bong-Joon Kim: Real Estate Research Institute, Korea Real Estate Board, Daegu, 291 Innovalley-ro, Dong-gu, Daegu 41068, Korea

Land, 2022, vol. 11, issue 7, 1-12

Abstract: In most African countries, property taxes fail to efficiently generate sufficient revenue to provide adequate local services. One of the crucial reasons for this is that market values are not reflected in the taxable value because of a lack of property transaction market data. When market data are inaccessible, buildings are evaluated using the replacement cost method, which does not reflect locational values. In this study, we examine methods to improve the valuation system using the case of Zanzibar, Tanzania. We recommend the simple and systematic mass assessment model, with details that can be used to derive locational values for all taxable buildings and improvements. In this model, (1) the taxable areas are divided into sub-regions based on land value stratification, (2) land value ranges are set for each sub-region, (3) land value determinants are identified, and (4) land price ratio tables for the identified land value determinants are created. In this assessment method, individual valuers play an essential role in capturing locational values because their knowledge and experience are helpful in dividing the area targeted for property tax assessment into several regions, thereby reducing the intraregional variance in land values. Improving the valuation system is one of the key factors in determining the importance of property tax as a revenue generator in developing countries.

Keywords: property tax reform; land valuation; valuation problems; developing countries; Africa (search for similar items in EconPapers)
JEL-codes: Q15 Q2 Q24 Q28 Q5 R14 R52 (search for similar items in EconPapers)
Date: 2022
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