Mahama Ayariga
The Minister-designate for Local Government, Chieftaincy and Religious Affairs, Mahama Ayariga, has said Metropolitan, Municipal and District Assemblies (MMDAs) could mobilise close to GH¢20 billion annually from property rates if the revenue potential of properties across the country is properly identified, valued and collected.
He said strengthening the internally generated revenue capacity of the Assemblies would be one of his major priorities if approved by Parliament.
Appearing before Parliament’s Appointments Committee for his vetting, Mr. Ayariga said the Constitution envisaged assemblies becoming financially self-sufficient, with revenue from central government intended primarily to support development.
He, however, acknowledged that the country had largely failed to achieve that objective, leaving Assemblies heavily dependent on transfers from central government.
“The first thing people have to know is that it is the intention of our Constitution that Assemblies should be self-financing,” he said.
Mr. Ayariga said the Assemblies had significant untapped revenue potential, particularly from property rates, basic rates, market tolls, lorry park tolls and other levies provided for under the Local Governance Act.
He said his preliminary analysis with some experts suggested that property rates alone could generate nearly GH¢20 billion a year for the Assemblies, based on conservative estimates.
“The last time I sat with some experts to do some basic analysis from property rates alone, I believe that the Assemblies could be collecting close to GH¢20 billion annually, just property rates alone, at very, very conservative figures,” he said.
He attributed the low level of collection partly to the absence of comprehensive information on properties and their values, as well as difficulties associated with collection at the local level.
Mr. Ayariga said the existing street naming and property addressing system provided information about the location of properties but did not sufficiently capture their characteristics or values for the purpose of determining appropriate rates.
He, therefore, proposed a nationwide exercise to identify, properly describe and value properties that should be paying rates to the assemblies.
“The first major thing I will do as minister is to put in place an infrastructure for us to immediately identify all properties across the country that are supposed to be paying rates to the assemblies,” he said.
He further proposed that the collection system be fully digitised to minimise leakages and prevent revenue collected on behalf of assemblies from being diverted.
According to him, digitisation should cover the identification and valuation of properties, payment of rates and the disbursement of the resulting revenue.
He said such a system would also enable the central authorities to monitor the collection process and identify the reasons for poor revenue mobilisation in particular districts.
Mr. Ayariga said political and social relationships at the local level could also make revenue collection difficult, particularly where MMDCEs were expected to collect rates from influential people within their communities.
He cited the difficulty a District Chief Executive (DCE) could face in demanding property rates from traditional leaders or political party supporters.
He also expressed concern that when revenue collection was left in the hands of party activists, relatives and other politically connected persons, some of them could regard the proceeds as a reward for their support and fail to account properly for the money.
Mr. Ayariga said the situation required a system that reduced human intervention and ensured that revenue collected went directly through transparent channels.
He argued that rapid urbanisation was creating substantial economic opportunities for local authorities, which could be harnessed to finance development.
He cited districts hosting major economic facilities, including the Ghana Airport Company, as examples of areas that should be able to generate substantial local revenue from the economic activities taking place within their jurisdictions.
According to him, the concentration of economic activity in urban areas meant that Assemblies had the potential to become financially stronger if they improved their revenue collection systems.
He said the objective was not simply to increase taxes and levies but to ensure that existing revenue sources were effectively captured and managed.
By Ernest Kofi Adu, Parliament House