Governance Watch Ghana has described the government’s newly proposed property rate as illegal and counterproductive.
According to the group, the government’s new arrangement flies in the face of the Local Government Act, adding that it has the potential of depriving the already under-financed and impoverished Municipal Metropolitan and District Assemblies (MMDAs) funds if allowed.
The Government has proposed a new property rate, but Governance Watch has kicked against the initiative.
In a statement issued by Governance Watch Ghana, it said, “We do appreciate government’s efforts to enhance its revenue mobilization through innovation and strengthening of tax compliance. However, this does not justify the government hiding behind enhancing revenue collection to violate the laws of the country and, in effect, short-change the Ghanaian people.”
“It is against this backdrop that we have through our continuous vigilance uncovered a dubious single-sourced contract signed by the Ministry of Local Government, Decentralization and Rural Development with a service provider to develop a unified common platform for property rate collection. The amorphous service provider, who has no track record whatsoever in the area of revenue collections, is expected to provide the funding for the evaluation of properties and to undertake the collection of property rates,” the statement claimed.
It cautioned the government to cease any further steps towards awarding the said illegal contract.
“We wish to serve notice, and notice is hereby served, that Government must forthwith, cease any further steps towards implementing the said illegal contract awarded, failing which we will be compelled to resist same through every lawful means, including massive street protests,” the press release said.
Read below Governance Watch Ghana’s statement.
GOVERNMENT’S APPROACH TO NEW PROPERTY RATE REGIME ILLEGAL AND COUNTERPRODUCTIVE – GOVERNANCE WATCH GHANA.
After a painstaking analysis and consideration of government’s newly proposed Property Rate regime, Governance Watch has come to the conclusion that the initiative although laudable in principle, is unlawful and counterproductive in its current form.
We have taken this view because the new arrangement flies in the face of the Local Government Act and has the potential of depriving our already under-financed and impoverished MMDAs of funds if allowed.
The Finance Minister in his presentation of the 2022 Budget Statement and Fiscal Policy of Government, specifically at paragraph 303, recognizing the potential contribution of property rates to Government’s revenue mobilization effort stated in part:
“Government, through the Ghana Revenue Authority will from January 2022, assist the MMDAs to implement a common platform for property rate administration to enhance Property rate collections and its accountability.”
While underscoring the critical role and mandate of MMDA’s to collect Property Rates, the Minister made a commitment to Metropolitan, Municipal and District Assemblies (MMDAs) thus;
“To ensure cost recovery by Government in providing the infrastructure for the collection of the Property Rate, a sharing ratio will be agreed with the Assemblies.”
We do appreciate government’s efforts to enhance its revenue mobilization through innovation and strengthening of tax compliance. However, this does not justify government hiding behind enhancing revenue collection to violate the laws of the country and in effect, shortchange the Ghanaian people.
It is against this backdrop that we have through our continuous vigilance uncovered a dubious single-sourced contract signed by the Ministry of Local Government, Decentralization and Rural Development with a service provider to develop a unified common platform for property rate collection. The amorphous service provider who has no track record whatsoever in the area of revenue collections, is expected to provide the funding for the evaluation of properties and to undertake the collection of property rates.
This arrangement contravenes Section 144 of the Local Governance Act 2016, (Act 936), which provides that: “A District Assembly shall be the only authority to levy rates for a District despite any customary law to the contrary.”
Per the provisions of Act 936, the Minister of Finance and by extension, the Ministry of Finance has no power to sign a deal that seeks to centralize the collection of property rates and give responsibilities of MMDAs across the country to a single company.
It is worthy of note that, under the new property rate regime, only 30% of property rates collected by the service provider through the common platform will be remitted to MMDAs. The remaining 70% will be shared among the Ghana Revenue Authority, the Ministry of Finance and the service provider. This arrangement is not only unlawful, but has the potential of depriving MMDAs of a substantial chunk of property rate revenues thereby weakening them further and stifling local level development.
We are deeply concerned that this arrangement and the profit-sharing arrangement therein, if not immediately halted, can become yet another vehicle for misappropriation and misapplication of public funds as we have seen in times past.
The mandate of MMDAs to mobilize resources at their level to aid development at the local level strikes at the core of decentralization.
Under the laws of this country, only MMDAs have the mandate to undertake or to engage third parties to on their behalf, to undertake revenue collections in their jurisdictions. Section 161 Subsection (2) of Act 936 is clear about this, stating thus: “A District Assembly may, in writing, authorise any suitable person, to be a rate collector in respect of a specified area of a district”.
It goes without saying therefore, that mandating the Ghana Revenue Authority to develop a common platform for the collection of property rates which is what has culminated in the award of a single-sourced contract to a service provider to collect property rates in the country, is illegal as no such mandate has been extended to any body or institution apart from District Assemblies.
Section 153 of Act 936 provides clarity on the entities and individuals responsible for rate assessment which specifically are the Regional Minister and District Assembly. No such responsibility is extended to the Minister of Finance or the Ghana Revenue Authority.
Also, in furtherance of the mandate of the Assemblies and to ensure that revenues accruing from property rates are properly accounted for, Sections 161 and 162 of Act 936 make clear where payments accruing from such rates are to be channeled. Particularly, Section 161, Subsection 3(c) states that: “A rate collector shall pay the amounts collected to the District Assembly concerned”. This renders a complete illegality, the engagement of an agent for the collection of these revenues into a centralized GRA account.
In view of the forgoing, we are of the conviction that the new property rate regime the Akufo-Addo/Bawumia government is seeking to introduce is illegal and counterproductive, as it portends grave danger for the finances of local assemblies and local level development. This is particularly so, given the devastating effects of the undue delay in Common Fund releases and the debilitating effects of the obnoxious Capping and Realignment program on the finances of MMDAs and local level development.
It is totally unacceptable for government to disregard the law and award a contract that constitutes a usurpation of the powers of MMDAs in the name of property rate collections. We are of the considered view that any attempts to review and/or strengthen the property rate regime of the country as a means of increasing revenue must be done at the local level by MMDAs and not the Finance Ministry and/or the Ghana Revenue Authority. At best, efforts can be geared towards building the capacity of the District Assemblies to undertake this exercise which falls directly within their legal mandate.
We therefore call on Government to immediately halt this unlawful and counterproductive initiative. More importantly, we wish to call on Parliament to exercise its oversight responsibility over the Executive on this matter by ensuring strict compliance with the laws of the country by the government.
We wish to serve notice, and notice is hereby served, that Government must forthwith, cease any further steps towards implementing the said illegal contract awarded, failing which we will be compelled to resist same through every lawful means, including massive street protests.
**END**
Signed:
Stephen Kwabena Attuh
Executive Director