Tax & Accounting Blog

Capacity building for valuation – lessons learned from the surveying profession

Aumentum, Blog, Governments May 13, 2016

Earlier this year at the World Bank Land and Poverty Conference in Washington, D.C., attendees following the valuation tracks learned a lot about the issues of scaling up the valuation profession as it helps secure the land rights of the unrecorded and unregistered while at the same time raising revenue for government. While some issues are specific to the valuation profession, there are others that have been or are faced by the surveying profession as it addresses tenure security for the 70% of land that remains unregistered worldwide [1].

Drawing one comparative statistic – the number of registered surveyors and valuers in any one country – perhaps best illuminates the similarities between the professions. In Uganda, it is estimated there are between 30 – 50 registered valuers which is almost identical to the number of registered surveyors (38 in 2010) and this is for a country of almost 40 million people.  So, what we can we learn from those numbers?

To increase coverage, make use of para-valuers and trusted brokers

Uganda shows there is a significant shortage of professional valuers meaning valuation information is, at best, patchy. There is simply too much work to do. To address this in the surveying sector in Ghana, Thomson Reuters worked with para-surveyors and trusted brokers to relieve Government of its routine property survey tasks. So, let’s consider using an equivalent ‘para-valuer’ as well as trusted brokers like NGOs and MFIs, to assist in mass data collection exercises. Assuming adherence to national and international measurement standards, a parallel cadre of valuation personnel could go a long way in addressing governments’ pressing need for baseline data.

To prepare for growth, IT solutions must be scalable

Riel Franzsen in his overview of global property tax systems[2] observed that there were wide variations in valuation approaches from the simple to complex. Let’s say for the sake of cost and due to lack of capacity a country decides initially to adopt a simple area-based approach to valuing its property stock. Over time it decides to switch to something more sophisticated. If IT was initially configured for the area base valuation approach it should be capable of making the switch to something more sophisticated with minimal costs from both a systems and data perspective; think a continuum of systems from mobile to enterprise and standards like STDM and LADM. In other words, any investment in IT should plan for scalability and data model compliance.

To ensure sustainability, decentralize effectively

Lastly, Richard Almy’s comparative analysis of property tax regimes[3] expressed property tax collected as a percentage contribution to GDP whether raised centrally or locally. His results suggested that regional/local tax property collection generally led to a higher GDP contribution. So, it appears decentralization is not only a good way to improve service provision (and unsurprisingly is the thrust of many legislative initiatives by governments), but it also improves revenue collection. If local tax collection raises more tax dollars and central governments expect local property tax offices to perform their functions effectively, then local offices should be able to keep the revenue they raise rather than remitting it to a central government. By keeping revenues, these offices would be able to recruit valuation professionals and sustain their IT infrastructure, investing in upgrades and support. So, as central governments hand ever larger responsibility to local governments, making property tax collection more democratic, they should not forget to financially empower these offices as well.

There will certainly be many more lessons we can learn from the two professions who are at the forefront of addressing global land issues.

 


[1] UN-HABITAT/GLTN

[2] Property Tax Reform in Africa: Challenges and Potential, William Mccluskey and Riel Franzsen, World Bank Land and Poverty Conference, 2016

[3] Effective and sustainable systems for valuing property for taxation: A comparative analysis, Richard Almy, World Bank Land and Poverty Conference,  2016