Local Taxation

How to finance sustainable service delivery in developing and transitional countries? Increase revenues from local taxes!

Urbanisation is an undeniable global trend. By 2030, urban areas are estimated to house 60% of the world’s population. Of these urban inhabitant, 828 million people will live in slums, and the numbers are projected to keep rising. Cities are facing enormous urban challenges including tackling the impact of climate change, insufficient funds to provide basic services, the provisioning of healthcare and education, and to restore deteriorated infrastructure – all of which disproportionately affect the urban poor.

tax collection Given this context, it is easy to imagine that many people across the globe have no access to clean drinking water, their homes are left dark without electricity, and roads remain unpaved. Everybody knows, whether you like to pay them or not, that revenues from (local) taxes can fund the basic public services we all need. However, in many countries local governments only receive 10% to 20% of the revenues that could have been collected. This is a resource mobilisation gap up to 80% to 90%.

As highlighted by SDG 17, enhancing domestic resource mobilisation, by strengthening the ability of cities and regions to collect revenues, is an important enabler for governments to provide better and more accountable services to their citizens. With our taxation team, we strengthen tax administration in transitional and developing countries. Our services vary from managing the introduction of complete new taxation process (e.g. property rate collection in Ghana), or the introduction of a Fees for Water Management (Ethiopia), to decentralisation of property tax collection from the Ministry of Finance to the local level (Palestine Territories). Key feature of our approach is to link taxpayers tax liability to tangible expenditures in services, infrastructure and amenities through clear, effective communication. Doing so, we try to build a taxpayers climate that is built on trust in the local government. Our main clients are the Dutch Ministry of Foreign Affairs, the European Commission and the World Bank.

How to Increase revenues from local taxes? Click here!

Click here for our brochure "Improving property tax - A comprehensive approach"

More information:
Project Manager: Siebe.Stellingwerf@vng.nl, +31 6 10 84 47 74
Lead Architect: Henri.tenBroeke@vng.nl, +31 6 34 61 79 70

Terminology
Team Local Taxation

The terms used to designate local taxes varies from country to country. For example, in Anglophone African countries, property tax levied at the local level is referred to as rates, sometimes with an added descriptive noun (compound in the Gambia, local in Mauritius, property in South Africa, or tenement in Nigeria).
For us local revenues include taxes, licences, rates and fees. Where we use the term local taxes this also includes fees, licenses, rates etc. We will use this term in general information, blogs and reports. When we describe a specific case in a specific country we will use the terminology as applied there.
When talking about local taxes we follow the description given by the Erasmus University Rotterdam:

Closed system: law gives tax discretion to municipality; principle of legality
If not defined, council is free to choose tariff, differentiations, exceptions, tax object etcetera;
No income policy (only central government is allowed) and bound to principles of proper administration / legislation, such as equality
Legal protection and tax collection according to national fiscal rules/laws

Examples of local taxes are: property taxes, parking tax, tourist tax, waste cleaning taxes, water fees, construction permit taxes and business operating taxes.

Which terms are used in our projects?

Ghana	Local Revenue Collection, Internally Generated Funds (IGF), Property Rates
Palestinian Territories	Property Tax
Ethiopia	Water Charge

Our Team

For our taxation projects we have a strong team of in-country and international experts. The in-country team has extensive knowledge of the different stakeholders of our projects and are specialised in different areas of expertise relevant to the projects. They are working full-time and on-site with a special focus on the implementation of the projects. Additionally, a pool of Dutch and international experts complements our in-country teams. They combine specific tax related expertise with extensive experience in working for tax administrations. The areas of expertise covered encompass Communication, Business Process Redesign, IT, Tax, Legal (levying, collection and enforcement of taxes and the valuation of properties), Change Management, Communication, Project Management, Accountability and Transparency: a strong coverage of all areas of intervention, and ensuring the successful implementation of the projects!