Despite Daunting Challenges…   IMF Supports Freetown City Council Property Tax Reform

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Her Worship Mayor Yvonne Aki-Sawyer

By Amin Kef Sesay

The issue of rolling out a Property Tax Reform by the Freetown City Council under the leadership of Her Worship Mayor Yvonne Aki-Sawyer has become a very topical issue with some in favour of it and others against it saying the timing is not right coming at a time when we are grappling to combat the spread of the coronavirus.

However, what is indeed very certain is the fact that Mayor Aki-Sawyer has made it categorically clear that a reform is necessary in order to position Council to generate more revenue which it needs to execute some of its traditional functions, among which is to effectively continue to keep the city clean and also to pay certain members of staff whom are not on the regular Government payroll.

She underscored that allocations from the Ministry of Finance are not disbursed timely and such is negatively impinging on the activities of the Council.

The issue took another dimension when the Minister of Local Government and Decentralization, Tamba Lamina, stated that the Mayor failed to follow due process in her move to institute the reform.

It could be recalled that recently the Freetown City Council utilized resources in order to undertake a geo-mapping of all properties in Freetown to determine their value which should provide the basis of how much a particular property owner should pay annually as property tax. In a recent interview, Mayor Aki-Sawyer explained that the data they generated after the mapping exercise clearly shows that tax on certain properties will go down and others will go up. She further mentioned that though it is an annual tax yet property owners could pay by monthly installments. Also, she mentioned that payment of the new property rates will take effect after the end of September this year.

While all these are taking place, the International Monetary Fund (IMF), on the 28thJune 2020 has added its voice on the issue in what it dubbed as, “IMF views of Freetown City Council’s Property Tax Reform.” This was what the IMF said: “We fully support this reform that appears to be in line with the best regional practice. While there is always room for improvement, we believe this reform could bring Freetown in line with other towns in the country and region in improving the property tax system.

While these taxes represent almost half of the city’s revenue (more than in other towns), a reform of the property taxation system is needed. We believe that successful implementation of this reform could allow for a doubling or even tripling of Freetown’s own-source revenue in a clear and transparent way. This increase in resources would reduce the FCC’s reliance on at times unpredictable transfers from the central Government and ensure sufficient and timely revenue for the provision of sanitation and hygiene services-critical during the pandemic and beyond.”

The IMF also commended the Freetown City Council for excellently communicating the reform process and the anticipated advantages that would ensue when it comes into effect.

The Bretton Woods financial institution welcomed the FCC’s actions to inform taxpayers on the introduction of the points-based property tax, while recognizing it may not have reached all-mainly low-income-property taxpayers.

The IMF added, “We would strongly support plans to continue this information campaign and suggest reinforcing it (including showing how this revenue can improve Freetown’s public services). This means ensuring improvements in public works are visible and linked to increased property tax revenue (e.g., signage that this school/hospital/street is maintained/cleaned using that money!)”.

With regards postponement of the reform, the IMF said they do not see any strong reason to postpone the reform in the current COVID-19 context.

It says, on the contrary they support implementing the new system that allows to increase property taxes on high-end property
while supporting the most vulnerable and those most affected by the crisis.

The IMF furthered that as the FCC has already announced the reform and new property rates, postponing or suspending the reform could be
counter-productive, eroding tax compliance and the overall trust in the reform agenda.

The institution maintained that in line with their broader fiscal policy advice, administrative measures should be the first line of defense to protect individuals and firms affected by the crisis. It continued by saying that these measures should be targeted, temporary and timely. “As mean-testing is limited, affected individuals and firms should reach out to the FCC administration to indicate their payment difficulties. Local tax administration should do the same. The use
of digital solutions in the new system facilitates making these contacts and entering in payment agreements if they are needed,” the IMF concluded.

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