Researchers from the IDS-based International Centre for Tax and Development (ICTD) worked with the city council of Sierra Leone’s capital Freetown and the International Growth Centre to create a more equitable, efficient property tax system. Revenue potential has since increased fivefold, helping to fund critical local services for residents.
The city’s colonial-era property tax system was obsolete and regressive – with area-based valuation meaning a tin shack could pay the same amount as a three-storey brick building. When Yvonne Aki-Sawyerr was elected mayor of Freetown in 2018, she made revenue mobilisation – particularly property taxation – central to her agenda to ‘Transform Freetown’. She reached out to the ICTD, which was working on these issues through its African Property Tax Initiative (APTI).
ICTD researchers introduced the Council to a fairer and more practically feasible points-based property valuation method. After a successful pilot the Council approved the new system, and the project was scaled up to cover the whole city, with funding from the UK’s Foreign, Commonwealth and Development Office in Sierra Leone.
By April 2020, 95 per cent of properties in Freetown were mapped and valued – doubling the number in the register. The partners built a new IT system to manage the entire process from data collection to billing, and enabled payments to be made via banks. The new system is much more progressive, with tax payable on the top quintile of properties more than tripling and that on the bottom quintile more than halving.
Overcoming challenges to reform
In May 2020 distribution of tax bills began, but a month later the central government called for the project to be paused in order to review national guidelines for property tax reform. The project partners responded by working with stakeholders across government, and other local councils, to make the case for the Freetown reform model, and avoid new guidelines that would undercut it. Those efforts enabled the Mayor, six months later, to press ahead with the reform.
Meanwhile, staff at the Freetown City Council began to call for greater ownership and control over the project. Over the past year, the project team has worked closely with local government officials to design new administrative structures and provide training in order to effectively handover the project and ensure its sustainability. In documenting these experiences and processes, the researchers are generating substantial new insights into how to implement large-scale reforms.
Local success, international recognition
Since February 2021, demand notices have been delivered to every property in Freetown. In just the first two months of the year, more than $537,000 was collected, compared to the total annual revenue potential of about $800,000 under the old system.
The programme included an intensive public outreach campaign and participatory town hall meetings to allow taxpayers to discuss and vote on priority public services to deliver. The Mayor committed to allocating 20 per cent of revenue from property taxation to participatory budgeting each year. So far the process has been successfully implemented in 30 city wards.
The Freetown reform attracted significant attention: it was published as a ‘top story’ by African Arguments, featured in The Economist, and presented at the African Union and African Tax Administration Forum High-Level Tax Policy Dialogue, and the World Bank’s annual tax conference.
Local governments in The Gambia, Nigeria, Senegal, Cameroon and elsewhere are now exploring similar reforms with the ICTD, and a new partnership with UN-HABITAT is in the works. The Centre has also secured funding from several new donors to build on the success of the APTI and launch an expanded Local Government Revenue Initiative.
