valuation: reform methods and challenges
TRANSCRIPT
Valuation: Reform Methods and Challenges
presented by
Paul FishChartered Surveyor
Revenue Development Foundation
Fariya MohiuddinTax Consultant and Researcher
ICTD 5th Annual Meeting, Addis Ababa, February 10 – 13
Identification• Satellite imagery– identify buildings and verify with owners
• GIS Work– Region Boundaries– Ward Boundaries – Streets named / coded
• Property Inspections – house numbers assigned
Valuation Criteria
• Ease of explanation to Taxpayer• Automated valuation model• Mass appraisal method• Train local staff to administer• Ease of an Appeal process • Limited exclusions• Allow frequent updating
Two Common Methods
Value Based AssessmentOR
Area Based Assessment
Value Based Assessment• Market value / rental value of property or• Land Value
• Requires valuation expertise and cost• Undertaken on Parcel by parcel basis• Takes time to undertake and update• Requires market transaction benchmarks• Many taxpayers will not appreciate value concept
Area Based Assessment
• Regressive
However:• Relative ease to explain and for tax payer to appeal• Simple to train administrator • Ease of Local Trainers to implement• Automation• Mass valuation• Ease of updating
Market Value vs Points Value
Reform ChallengesAs Machievelli observed in the 16th century,
“... there is nothing more difficult to carry out, nor more doubtful of success, nor more dangerous to handle, than to initiate a new order of things. For the reformer has enemies in all those who profit by the old order, and only lukewarm defenders in all those who would profit by the new order, this luke warmness arising partly from fear of their adversaries, who have the laws in their favour; and partly from the incredulity of mankind, who do not truly believe in anything new until they have had the actual experience of it.'' (Machievelli ).
Reform Challenges
Entrenched systems are difficult to change• Self interested parties• Legislation• Public Mistrust• Weak local administrations• Systemic changes take time to institutionalise• Central Government “decentralisation”• Funding
Reform Solutions
To counter challenges, the critical component is to build stakeholder support through identifying and fostering:
• Visionary leadership• Popular support (“Benefits Tax”)• Political will• Incentives / bargaining• Judiciary support• Low Cost implementation
Valuation: Reform Methods and Challenges
THANK YOUPaul FishChartered SurveyorRevenue Development [email protected] MohiuddinTax Consultant and [email protected] 5th Annual Meeting, Addis Ababa, February 10 – 13