By Kolawole Ojebisi
The International Monetary Fund(IMF) has explained how Nigeria and other low income countries can generate revenue through property tax.
The Bretton Woods institution disclosed this in its recent analysis.
It stated, “Recurrent taxes on immovable property could help local governments capture the wealth generated through construction-intensive urbanisation. Generating such revenue fairly is especially important given the difficulty in developing countries of taxing income and wealth, which can be highly mobile.
“The appeal of property taxes is clear when we look at revenue raised in advanced economies: more than one per cent of GDP on average in OECD countries, and nearly three per cent in some advanced economies. By contrast, they raise only around 0.1 percent of GDP in emerging Asia and Africa.
“Achieving such a large growth requires improving property-tax coverage and addressing the capacity challenges in valuing real estate as ways to reverse the current revenue underperformance.
“New property identification technologies and simplified valuation methods have become widely available. With policy reforms and better technology, recurrent property tax revenues in developing countries should be at least 10 times higher than current levels.”
According to the IMF, global governments will need to raise an estimated $3tn to meet development goals by 2030, with emerging markets requiring four per cent of their GDP and low-income countries a challenging 16 per cent.
“The world’s governments must raise an additional $3tn to achieve sustainable and inclusive economic growth goals this decade. The cost in emerging markets equals four per cent of gross domestic product and 16 per cent for low-income countries.
“How can countries finance such staggering price tags? Large cities such as Delhi and Lagos show a way forward: Taxing property more efficiently can play a meaningful role in raising revenue at the local level, allowing countries to invest more in their people, new IMF analysis shows.
“Previous IMF research has shown that countries have ample potential to raise more domestic tax revenue if they need it up to 5 percentage points of GDP over two decades…”
It added: “More than one per cent of GDP on average in OECD countries, and nearly three per cent in some advanced economies, adding that by contrast, they raise only around 0.1 percent of GDP in emerging Asia and Africa.”
Such approaches, the IMF suggested, could make property taxes 10 times more effective with the right policy adjustments and technology, like satellite imagery and drones, to map properties and expand tax coverage.
Technologies such as geographic information systems and drones are already in use in cities like Delhi and Bangalore to track property changes accurately, and the IMF is encouraging similar measures in Nigeria.
The IMF reiterated that with proper implementation, property taxes can help resource-constrained countries like Nigeria improve local services, enhance economic stability, and foster inclusive growth, paving the way for a stronger fiscal foundation.
