Introducing a Property Registration System For Taxation in Ethiopia. The Case of Mettu Town

Masterarbeit , 2020 , 84 Seiten , Note: A

BWL - Rechnungswesen, Bilanzierung, Steuern

The objective of this study is to describe the importance of introducing a real property registration system for property taxation system improvements. Mixed research approach has been used to collect and analyses data. Field activities including questionnaires, interviews and direct observation were undertaken in order to get information on the current situation of the property tax system and land registrations. Based on the analysis, the need for the property taxation in the study area, the gaps in the information provided by the current land register were identified. The results showed that the establishment of a real property registration system facilitated the property taxation process and consequently maximize property based revenue.

Property taxation is one of the means to generate revenue by government for the local developments. To improve the property taxation government needs to ensure that its property records contain information that is beneficial to collect property taxation. Introducing a real property registration system that has complete contents and mechanisms to regularly updating is the most important tool to support the property taxation system. With regard to this, many authors have discussed the role of the real property registration system in general, but not enough researches have been carried out to investigate the value of establishing a real property registration system on property taxation. There is a direct strong relationship between real property registration system and improvements in property taxation. The study recommended that the current registration system should be remodelled to include the vital information such as property value, owners address and tax amount that is desired to collect property taxation. Comprehensive real property policies, cost-effective systematic registration and computerizing the records were suggested to improve the current deficiency of land register.

Table of Contents

Declaration

Approval

Acknowledgment

List of Tables

List of Figures

Acronyms

Abstract

CHAPTER ONE
INTRODUCTION
1.1. Background of the Study
1.2. Problem Statement
1.3. The Objective of the Study
1.3.1. Main Objective
1.3.2. Specific Objectives
1.4. Research Questions
1.5. Significance of the Study
1.6. Scope of the Study
1.7. Description of the Study Area
1.8. Limitation of the Study
1.9. Organization of the Research
1.10. Conclusion

CHAPTER TWO
LITERATURE REVIEW
2.1. Introduction
2.2. Conceptual Literature Review
2.2.1. Concept of Real Property Registration
2.2.2. Suitability ofReal Property Registration
2.2.3. Systems ofReal Property Registration
2.2.4. Types ofReal Property Registration
2.2.5. Contributions ofReal Property Registration System
2.2.6. Property Taxation and Identification of Taxable Properties
2.2.7. The Relationship ofReal Property Registration and Property Taxation
2.2.8. Contents of a Real Property Register
2.3. Empirical Literature Review
2.3.1. Real Property Registration Systems in Selected Countries
2.3.2. Real Property Registration System and Property Taxation in Ethiopia
2.4. Research Gap
2.5. Conceptual Frame Work
2.6. Conclusion

CHAPTER THREE
RESEARCH METHODOLOGY
3.1. Introduction
3.2. Operational Definition of Variables
3.3. Research Approach
3.4. Research Method
3.5. Sampling Technique
3.5.1. Population of the Study
3.5.2. Sampling Frame
3.5.3. Sampling Unit
3.5.4. Sample Size
3.6. Sources ofData
3.7. MethodofData Collection
3.7.1. Questionnaires
3.7.2. Key Informant Interviews
3.7.3. Direct Observation
3.8. Data Quality Assurance
3.8.1. Validity
3.8.2. Reliability
3.9. Data Analysis, Interpretation and Presentation
3.9.1. Data Analysis and Interpretation
3.9.2. Data Presentation
3.10. Ethical Consideration
3.11. Conclusion

CHAPTER FOUR
FINDINGS AND DATA ANALYSIS
4.1. Introduction
4.2. Response Rate
4.3. Characteristics of the Respondents
4.4. Findings of the Study
4.4.1. Suitability of Current Land Registration Practice for Property Taxation
4.4.2. The Relationship of Property Registration System and Property Taxation
4.4.3. The Contribution of Introducing Real Property Registration System
4.5. Discussion and Interpretation of the Findings
4.5.1. Suitability of Current Land Registration Practice for Property Taxation
4.5.2. The Relationship ofReal property Registration System and Property Taxation
4.5.3. Contributions oflntroducing Real Property Registration System for Taxation
4.6. Conclusion

CHAPTER FIVE
CONCLUSION AND RECOMMENDATIONS
5.1. Introduction
5.2. Conclusions
5.3. Recommendations

Reference List

Appendixes and Annexes

Acknowledgment

“All things were made by him: and without him was made nothing that was made.” John 1:3

First and foremost, I would like to give my thanks for the Almighty God and St. Virgin Marry for the gift of life, continued love and for being guardians and with me for each and every activity of my life. I am also sincerely grateful for Mr. Zelalem Yibrah, for his invaluable assistance and guidance during the work of my study. I would like to say thank you to my lovely wife Derartu Diriba and my child Nathan Tesfaye for their endurance and patience during my stay in university and I would like to dedicate this work to you.

I am also grateful to employees of Urban Land Development and Management Agency and Revenue Authority of Mettu town for helping me during the data collection activities and for their timely assistance. Similarly, I would like to thank property owners for their willingness and commitment in providing valuable feedbacks by responding to the questions.

Last but not least, my deepest gratitude goes to Mettu town administration and Ethiopian Civil Service University (ECSU) for providing me a full scholarship opportunity to attend my MSc program. Finally, I would like to thank you, my family, best friends, and classmates especially Ato Mihiretu Sahilu and everybody who was important to the successful realization of my thesis that I could not mention personally one by one. You all are dear to me. Thank you.

List ofTables

Table 3.2 Reliability Test (Cronbach’s Alpha)

Table 4.1 Characteristics of the Respondents

Table 4.2 Correctness of Land Records with Reality in the Ground

Table 4.3 Existing Real Property File Organization

Table 4.4 Correlation Coefficient Analysis of Variables

Table 4.5 Linear Regression Model Summary

Table 4.6 Multiple Linear Regression Analysis

Table 4.7 Multicollinearity Test

Table 4.8 Contribution of Property Registration to Facilitate Property Taxation

Table 4.9 Contribution of Property Registration on Enhancement of Taxable Properties

Table 4.10 Respondents Perception on Fairness ofProperty Taxation

Table 4.11 Effects ofHolding Land Title on Tax Payment

List of Figures

Figure 1. 1 Map of the Study Area

Figure 2. 2 Conceptual Framework of the Study

Figure 4. 1 Title Registration Coverage in the Study Area

Figure 4. 2 Existing Land Holding Certificate Format

Figure 4. 3 Existing Real Property Document Organization

Figure 4. 4 Comparison ofExisting Properties with Taxable Properties

Acronyms

Abbildung in dieser Leseprobe nicht enthalten

Abstract

Property taxation is one of the means to generate revenue by government for the local developments. To improve the property taxation government needs to ensure that its property records contain information that is beneficial to colled property taxation. Introducing a real property registration system that has complete contents and mechanisms to regular updating is the most important tool to support the property taxation system. With regard to this, many authors have discussed the role of the real property registration system in general, but not enough researches have been carried out to investigate the value of establishing a real property registration system on property taxation. The objective of this study is to describe the importance of introducing a real property registration systemfor property taxation system improvements. Mixed research approach has been used to colled and analyses data. Field activities including questionnaires, interviews and direct observation were undertaken in order to get information on the current situation of the property tax system and land registrations. Based on the analysis, the need for theproperty taxation in the study area, the gaps in the informationprovided by the current land register were identified. The results showed that the establishment of a real property registration system facilitated the property taxation process and consequently maximize property based revenue. There is a direct strong relationship between real property registration system and improvements in property taxation. The study recommended that the current registration system should be remodeled to include the vital information such as property value, owners address and tax amount that is desired to colled property taxation. Comprehensive real property policies, cost effective systematic registration and computerizing the records were suggested to improve the current deficiency of land register.

Keywords: Property Tax, Real Property Registration, Correct, Update, Complete

CHAPTER ONE

INTRODUCTION

This study is concerned to describe the importance of introducing real property registration system for taxation in Ethiopia; by selecting Metu town as case study. This chapter introduces the research to the readers, making them understand why the research was carried out. It contains background of the study, statement of the problem, objectives, and research questions, significant of the study, scope/ delimitation of the study, definition of terms and limitations of the research.

l.l.Background of the Study

All over the world local governments are the primary providers of basic infrastructure such as water, health facilities, public schools, waste disposal facilities, electric power, roads, and others. For this reason; municipalities are struggling to increase local revenues to facilitate service delivery in their administration (UN-Habitat, 2013). Property taxation is one of the means used to finance local governments in many countries and it has great potential for mobilizing local government revenue. However, due to deficiencies in correct and complete property information, many countries are facing problems in collecting significant property tax as their potential (Walters, 2011). Currently, property tax generates 0.3- 0.6 percent of GDP for developing countries and 2-3 percent of GDP for developed countries (IMF, 2015). This data suggests that there is a high potential for significant increases in property tax revenue, along with improvements in the efficiency of a real property registration system, especially in developing countries including Ethiopia.

The real property registrations system is required for numerous reasons, but two of them stand out from the rest. First, that a property owner needs to get publicity upon his/her acquisition of property and second the need for the state to know all land units available for taxation, services, planning, dues and other fees for collections (Larsson, 1991). In order to realize these needs and to make property taxation more efficient and effective, many governments have put in place various mechanisms such as the establishment of fiscal cadastre, enforcement mechanisms, online tax payments, etc. In line with this, Bird and Slack (2004) noted that the existence of a real property registration system is very important for the enhancement of property tax revenue. Similarly, Akingbade (2012) stressed that effective and efficient real property registration systems ensure that all data related to real property are consistent, correct, and up to date and also available to collect property taxation.

A real property registration system provides complete and accurate information on taxable property and property owners. By contrast, if real property records are not well established and updated it decreases property tax collection efficiency because of a lack of clarity about who owns what (World Bank, 2010). In addition to this, Blankart (2014), stressed that for effective property tax, the relationship between property and owners should be established. This relationship is established when all information about real property and owner records and put in one repository to build up the real property registration system. Real property registration is here defined as a system for land and buildings being a valuable property in which the location, value, and area as well as the owner's address and name, etc are stated in the registry.

According to Zerihun & Tarek (2013), the need to establishing a real property registration system in Ethiopia was started in 1907 during Menelik II. The emperor has enacted the proclamation to respond to the interest of foreign embassies regarding secured land plots. The proclamation was provided procedures for the registration and transfer of landholding and the issuance of title deeds, as well as property taxation and the like. Nevertheless, its implementation is no goes further. Likewise, during the military regime, there was a need to establish and maintain a modern system of property registration, to design and implement land use programs and to undertake land surveys to aid the land reform process. However, this was not possible due to internal political strains (Rahimato, D. 2009).

In contemporary situations, the federal government of Ethiopia was struggling for the establishment of a legal cadastre to alleviate the difficulties in land information (Alemie, 2015). However, still, now there is no modern system of real property registration that supports property taxation in Ethiopia. Therefore, this study is conducted to describe the importance of introducing real property registration for property taxation purposes.

1.2. Problem Statement

The Ethiopia land registration was designed to support juridical/ legal aspects of ownership security and hence the emphasis was towards ownership rights registration. Besides, the design of the content and format of the register did not take into account the needs of property taxation. Nevertheless, property taxation has an essential role in the overall development of local governments by producing a significant amount of revenue and funding for local infrastructure development. This reality implies that the role of the property register can no longer be limited tojuridical/legal, but will continue to expand to support the property taxation purposes.

The inefficiency in the current property registration is visible in the high taxable property exclusion and tax evasion, in which a reasonable component to collect property information, is either nonexistent in the register or is poorly recorded. Even though there are observable incompleteness and incorrectness in present land registration activities, previous and current efforts to improve the property register have been emphasizing on rehabilitation of records, to make ownership secure.

However, little or no attempt has been directed towards redesigning the registration to align it with the needs of the escalating and changing property taxation. Consequently, this situation makes a constraint to supply urban services and undertake the necessary infrastructure development in town under this study, which needs to improvise internal revenue generating projects to reduce dependency on regional and federal funding. If the record is not re-designed to focus on the needs of the property taxation, the role of taxation in national as well as local development and other strategic development plans of Ethiopia would be hampered.

Therefore, the absence of essential information to collect property taxation which has been exposing the town’s development to collapse inspired the researcher to undertake this study. Within this, the researcher has been initiated to study, on the title introducing a real property registration system for taxation to describe the importance of introducing real property registration in the enhancement of property based revenue.

1.3. The Objective of the Study

1.3.1. Main Objective

The main objective of this study is to describe the importance of introducing a real property registration system for property taxation in Ethiopia.

1.3.2. Specific Objectives

1) To evaluate the suitability of current land registration practice for property taxation in the study area;
2) To examine the relationship between real property registration system and property taxation in the town;
3) To show the contribution of introducing real property registration system to property taxation in the town;
4) To put forward the improvement strategy of the real property registration system for taxation purposes in the town.

1.4. Research Questions

1) How the current land registration practice is suitable for property taxation in the study area?
2) How real property registration system and property taxation are interrelated in the study area?
3) What are the contributions of introducing a real property registration system to facilitate the collection of property based revenue?

1.5.Significance of the Study

The study of introducing a real property registration system for property taxation in Ethiopia is relevant at this time. Although, the researcher was mainly focused on the purpose of academic reasons as part of partial fulfillment of Master of Science, in Property Valuation and Asset Management, all local governments or municipalities find this study for introducing real property registration system, which are effective in providing accurate and consistent property information in collection of property tax. This comes at a time when most the municipalities are struggling with the shortage in revenue due to narrow tax base coverage.

The recommendation of this study will help the towns in improving the present difficulties on the identification of taxable properties and property owners to enhance their domestic revenue tax. The study will also help the federal government as well as regional governments to enact laws and introduce real property registration system to boost property tax revenue in order to improve the fiscal autonomy of local governments. This will reduce the high level of funds transfer from federal and regional governments to local governments. Since there was not enough research done on the title yet, it will serve as a source and standing point for those who will be interested to conduct further and similar investigation deeply on a wider scale.

1.6.Scope of the Study

Thematic Scope: The real property registration system is used for recording, updating and disseminating information of properties for different purposes, like legal ownership, taxable properties, accessibility of utility and others. However, this study only focused on the importance of introducing a real property registration system for taxation purposes.

Spatial Scope: The researcher believed that dealing with both urban and rural real property registration system is not handled within the given maximum time. Therefore, the researcher was focus only on urban areas. While the study is appropriate if conducted at a national level however due to the limitation of resources this research was restricted to the case study area of Mettu town.

Temporal Scope: For the reason that the unavailability organized data and time limitation in organizing the data, different secondary data were assessed only within a period of five years from 2014-2018.

1.7.Description of the Study Area

Mettu is one of the Oromia’s cities that situated at about 600 Km south west of Addis Ababa. Mettu is found at the center of 14 districts. As indicated in some documents, it was established around 1917. The area of the town is estimated to be above 5736 hectors. The economic activities of this town are based on primarily economic, secondary& tertiary economic activities most dominantly on secondary, small scale industries and tertiary activities, which provide services to the general population.

According to the town Finance and Economic Development socio-economic profile (2018), the total population size of the town is 97,290 from which male account 52,527 (53.99%) and the rest 44,763(46.1%) are female. According to the town Urban Land Management and Development Agency (2019) there are 14,709 property owners in the town. Astronomically the Mettu town is located at 8° 00' 8" to 8° 31' 11" North latitudes and 29° 10' 3" to 29° 57' 41" East longitudes. Its annual revenue collection is birr {8,164,688.86}, {12,440,715.24}, {12,567,591}, {13,577,992.89} 2014, 2015, 2016, 2017 respectively. This is under performance when compared with the existing potential.

1.8.Limitation of the Study

One of the limitations of this thesis was that analyses of the challenges of introducing real property registration system had not been carried out. The other limitation is that the number of samples that would be taken is small as compared to the size of the country and number of the population. Furthermore, lack of reference documents and literature concerned with real property registration, respondents trust to provide clear information lack of finance and materials were also other challenges. However to overcome those challenges the researcher was work with full tolerance and convincing the respected respondents politely. The finance and material constraints were solved by the contribution of respected government offices and privately. In addition, the researcher has gathered data through many data collection methods to enhance the reliability and quality of data.

1.9.Organization of the Research

The thesis is organized into five chapters. Chapter one deals with the general introduction to the research. It includes the background of the study, problem statement, objectives, research questions, the significance of the study, the scope of the study, and finally limitations of the study. Chapter two addresses different literature reviews regarding real property registration, cadastres, property valuation for taxation purposes, concepts of property taxation, real property registration and property taxation in the context of Ethiopia as well as the experiences of different countries. The research gaps and conceptual framework of the study were also described in this chapter.

Chapter three is about methods and instruments that were used in data collection and analysis in order to meet the objectives and produce the research outcomes. This chapter was comprised of operational definitions of variables, research approach, research design, data types, and sources, study population, data collection methods, sample size and selection, data analysis and presentation methods and ethical considerations. Chapter four deal with the analysis and interpretation of the result. Finally, chapter five provides summary and conclusion of the research. It was given a summary and conclusions of the entire thesis and finally forwarded recommendations and perspectives for further studies.

1.10. Conclusion

This chapter presented the general background of the study and the problem inspired the researcher to undertake this study. In addition, the objectives of the study, significance of the study, scope of the study, limitations during data collection, definition of important terms and organization of the study was incorporated in this chapter.

CHAPTER TWO

LITERATURE REVIEW

2.1.Introduction

This chapter is dedicated to a review of the literature on real property registration with special emphasis on areas of supporting property taxation. The chapter explains the concept of real property registration, suitability of real property registration, systems of real property registration, types of real property registration, contribution of real property registration, relationship of real property registration and property taxation. The chapter also discusses the practice of real property registration systems in selected developed and developing countries as well as property records and property tax administration in Ethiopia. Research gap, conceptual framework, and conclusions are also incorporated precisely.

2.2. Conceptual Literature Review

2.2.1. Concept of Real Property Registration

According to UN-Habitat (2013), real property registrations are map based, combining of a geodetic control network, a coordinate system, cadastral maps, land register, building attributes, assessed and market estimation value and detail information taxpayers. The explanation is clearly defined real property registration and it is indicated that real property registration have an absolute important information that support property taxation activities. Therefore, for countries do not have a real property registration like Ethiopia, it is highly recommended that introducing a real property registration that linked the personal register with the property register, to have efficient property tax collection performance. As indicated by Mcllhalton (2013) to be modernizing real property registry, computerizing the records by using geographic information system (GIS) is essential.

Kitchen.H., (2013), explains the property identification and registration is very challenging in developing countries for many reasons; such as a) the digital maps for property identification sometimes do not exist, b) fiscal cadastre are not exist and not linked with the other agencies that manage land tenure rights, C) information on improvements may be missing due to the lack of re-registration and d) computerized tax records may not exist.

Alike with the idea of Kitchen (2013), in Ethiopia especially in most of emerging towns the digital maps, fiscal cadastre, re-registration activities and computerized property tax are not existed. In addition to this points modernize property owners address identification are also difficult. Therefore, establishing a good real property registration is the primary instrument to operate a reasonable property tax system and to implement any tax reform in developing countries, including Ethiopia. Furthermore, all taxable property should be identified and numbered with tax jurisdiction geographical area, to make property taxation complete and efficient

2.2.2. Suitability of Real Property Registration

To be more appropriate for efficient and effective property taxation, real property registration must meet certain requirements, such as completeness of real property records, correctness of records, updating and sharing essential property information (Ali, 2014).

i. Completeness

Completeness of real property records are defined by different authors and organizations such as NEN (2013), Cagdas (2012) and Oreyema (2016) as it’s the presence or absence of features and attributes of property information in registry. Furthermore, those authors indicated that, to be suitable for property taxation real property registry should provide value of properties and address of responsible person. However, their explanation is in a shallow way and do not well define completeness of real property records. Therefore, it is possible to define completeness of real property records as an absolute cadastral coverage of real properties within a specific jurisdiction with desired contents. As indicated by those scholars, real property registration should have detail information of property owners, information of real property and charge or tax information to be appropriate for taxation activities.

ii. Correctness

Correctness is concerns the correspondence between the situation in reality and the content of real property registry. Bittner & Frank.A, 2002 and Agrawal (2001) defined correctness of real property records as the accurate measurements and recording of properties information on property registration repository and the authors are properly define correctness of real property records. Therefore, correctness of real property records are capturing accurate information of properties such as it is value, use type, land grade, building type, owner detail and etc.

iii. Updating

Clarke, (2005) indicated that, property registration updating is very important for tracking all new taxable items as well as subdivisions, merges, and other changes that can affect the properties. The reality on the ground also confirms the idea of the author, thus having an updating mechanism for real property records are vital to perform property taxation effectively. Similarly, according to Hensen (2010), a property register loses its value when the stored information is not updated. Therefore, to have updated information of taxable properties, all changes in the property (property use, property value, size.. .etc) or in the owner (sale, inheritance, gift, etc) should be capture timely.

iv. Data Sharing

According to Ali (2014) data sharing is need a set up clear procedures and requirements for acquiring data, access to data and data dissemination among concerned institutions. Similarly, other authors such as Tulandhar, (2004) and Bird & Slack, (2004) explain the importance of data sharing as reducing the fragmentation of information. Imiru et al., (2017) and Kopanyi (2015) indicated that the deficiency of data sharing is the cause for bulky and expensive procedure of data availability. The authors are clearly defining data sharing and it is importance. Therefore, to perform property tax activities effectively, data sharing mechanism and system is vital.

2.2.3. Systems ofReal Property Registration

i. Deed System

Deed registration system is a system whereby a document that describes an isolated transaction is registered. The evidence of the title is registered, not the title. A deed, in itself, does not prove title but proof that a transaction took place. Under this system, the registration of a deed is considered as a measure of security, as a public notice that the transaction took place and a priority claim to be acquired from the time of registration, and as evidence to support a claim to a property interest (Dale &Mclaughlin, 2000). Alike with the Author the practice in Ethiopia also indicated that even though deed system is provide the right to possession of a property, it is impossible to get different services like credit, and guarantee of security from the government without having a title documents.

ii. Title System

Most countries using the title system started with the deed system but moved in order to get greater reliability and simplicity (Williamson, I., 2009). In the title system, the right itself is registered as opposed to the deed. The different rights in the parcel of land, the details of the owner or rightful claimant and the land together with its restrictions and appurtenances are registered in a land register of titles. This registration then creates a title or right which is the outcome of the transaction (Henssen, 2010). Thus it can be said that unlike the deed approach which is man based, the title approach and register are parcel based. With title registration the register is a proof of title and state guarantees the title so it takes up responsibility in case of any damages.

In context of Ethiopia, even though both title and deed systems are in practice, title system has a guarantee from government and to get different services. Therefore, with identical to the above authors title system is essential to simplify property information management and to enhance the reliability property records in Ethiopia.

2.2.4. Types of Real Property Registration

Real property registration is categorized into two type’s namely systematic and sporadic registration.

i. Systematic Registration

Systematic approach is the approach used to ascertain and to determine rights and liabilities in a property whereby authorities declare one or more areas as registration areas (Zevenbergen, 2004). Demarcation is done by using maps or ground surveys and landowners indicate their boundaries in the presence of local committees and neighbors. In addition, property owners provide evidence of their claim on the property. A list of all the all holders and their property rights is established and people are allowed to object the information provided by the claimants. Objections are formulated against the claim are handled by a committee or a court. Spatial and non-spatial information captured on the ground are entered in property register which serves as an official repository of all parcel information (Enemark at al., 2014). The definition and procedures of systematic registration approach explained by those authors are indistinguishable with the contents of 818/2014 land holding registration proclamation ofEthiopia.

ii. Sporadic Registration

In sporadic property registration approach property owners are voluntarily submit their application for property registration to the land office. After submission of ownership evidence by owner applicant, the concerned parcel is individually surveyed by land surveyor preferably in the presence of neighbors (Mukarge, 2016). Alike with Mukarge (2016), the reality on ground also indicated that sporadic registration approaches were applied in the means of compulsory sporadic and voluntary sporadic registration. However, the absence of systematic registration that enforces property owners to register their property, make difficult to identify taxable property. Therefore registering a property in systematic way is essential to put all properties in register repository.

2.2.5. Contributions ofReal Property Registration System

Benefits of property documentation apply both to individuals and the state. Each entity has gains from having property registered. Henssen & Williamson (2010) points out that the private function of property registration is related to the advantage which individual citizens get while the public function of land registration relates to the welfare of the state and community as a whole. Real property registration system enables government to establish an efficient and equitable system for justified levying of land or property tax. This tax, based on realistic value, needs information on location, size and ownership or stewardship of the land or property.

According to and Larsson (2000), property registration offers legal land security and protection for both the owner of the registered land and other parties who have interests in that particular registered land. With parties having confidence in the use and ownership of the land without being threatened by insecurities like evictions, it results into possibilities of making long term investments on land and maximize voluntary taxpaying situation that reduces the number of steps involved in property tax collection. Zevenbergen (2002), described that the establishment of a property registration system is made easy the process of property tax administration. Similarly, Tulandhar (2004) indicates that the availability of a comprehensive system of property registration was reducing the cost and time spent in property taxation activities.

According to Mukarage (2016) and Walters (2011), the improvements in a real property registration system in terms of completeness, correctness, updating and sharing of information has an essential role in maximizing property based revenue. Land documentation makes transactions on land between the involved parties easier, cheaper and more secure which heightens the land market. Consequently access to land is improved; conveyance of unregistered land is often expensive, unsafe and takes a long time. As a result the number of registered property is enhanced that simplified the access of property information (FAO, 2012)

According to Carvalho (2017) fairness in tax payment distribution has both horizontal and vertical components. Horizontal fairness considers equal treatment of taxpayers who have equal capability to pay taxes. Vertical fairness concept holds that the tax burden should rise with the increase in income. The existence of basic information of real property registration system minimizes unfair taxation system by including all properties and individuals who hold property to the property taxation system (Victoria and Keen, 2013). The availability of long-term credit by using titled land as a security in urban areas leads to increased land development and an improved land value, consequently property tax amount. Registering a real property has an essential role to encourage the attitudes of property owners towards paying property taxes voluntarily (Loo et al, 2009).

All scholars who are included in this sub section clearly indicated that the existence of efficient real property registration system has essential contribution on improvements of property taxation and their explanation is also confirmed in practical activities. Therefore, as clearly indicated by different scholars, introducing a real property registration system is important to alleviate the current challenges of property taxation in Ethiopia.

2.2.6. Property Taxation and Identification of Taxable Properties

IMF (2015) defines tax on properties as being the taxes on the use, ownership, and transfer of wealth, which include the annual property tax, inheritance and gift tax, land- related tax and taxes on financial and capital transactions. This study covers both property taxes and fees. Tax is levied for the common benefit of all taxpayers but the fee is paid for special benefit gained by the taxpayer proportionally to the service received.

Identification of taxable properties is identifying the taxable property and the owner or another person responsible for tax payment. According to Deinger k. (2012), there are two basic approaches used in property identification which are self-declaration approach and government inventory approach. For the self-declaration approach, the taxpayers have the obligation to report him/her self and provide the information about their property to the tax authority. In the government inventory approach, the tax authority obtains the information from agencies registers the property matters.

Therefore the ability of identifying the taxable properties and owners are depending on the coverage of real property registration, organization, and accessibility (Munoz, 2011). This task is achievable if the property registry has up-to-date information on these data. Information on property transfer and other data are received from other sources. It needs to permit issuing (Construction office) and title registry (Land Administration) agency aid in providing needed information to improve the completeness and quality of this record.

In identifying these properties, a complete and quality assessment record must be produced and should include information at least; parcel identification number, address, and classification of property usage, zoning code, legal status, size and shape of the parcel, improvement details, building perimeter drawing and owner’s details. The quality and quantity of the data used correlate with the accuracy of the resulting assessments, so collecting information on properties requires accuracy and uniqueness to ensure correctness (Alemie, 2015).

In a similar way with the authors under this sub section the researcher also believed that without properly identification of properties, collecting significant revenue from property tax is impossible. Accordingly, the assembling of an inventory on all taxable property units is the very first step in identifying and describing properties.

2.2.7. The Relationship of Real Property Registration and Property Taxation

Different scholars are indicated that the existence of strong relationship between real property registration and property taxation. For example, Williamson et al, (2010) recognized that recording real property information and documenting evidence of ownership enhances revenue from property taxation. Similarly, Bahl et al (2010), indicated that productive property taxation is not possible without all land and improvements are well identified. On the other hand, Zoneh, (2013) indicated that property taxation is essential to protect land speculation by levying high property tax that push the owner to use the land in efficient way.

Therefore, as indicated by those authors in one way or the other, having and using an effective real property registration system will contribute to the improvement of the taxation system and consequently will strengthen the state’s financial capacity resulting from the increase of revenue for public finances and this is confirmed on the reality world. Moreover, the ability of improving property taxation is depended on update information of the taxable property and its availability.

2.2.8. Contents of a Real Property Register

Contents of a real property register will differ from country to country since cadastral systems differ (Paasch, 2006). The content of the real property register will depend on the legislation of each country as legislation defines items and rights differently. Whereas one right may be registrable in one country, it may not be the case in another. However, if information sharing is to be encouraged across all boards, then standardization is needed in the content of the register as is the case with the technical design of the LIS (ibid). Identification of elements that constitute each component of the register will help determine the content of the cadastral information system (Simsion & Witt, 2004). Alike with Paasch (2006), the experience of different countries indicated that the contents of a real property register will differ from country to country. Therefore, it is important to form the content of real property registration based needs and capacity of the institution.

2.3. Empirical Literature Review

2.3.1. Real Property Registration Systems in Selected Countries

The selected countries have been based on having best practices on the property registration system. The three countries which are Rwanda, Sweden and England were improving their property tax administration system by introducing a real property registration system. Thus, the researcher has assessed the system by reviewing different published and unpublished documents to obtain in-depth information.

2.3.1.1.Sweden

Real property registration in Sweden can be said to be in between a deed and title system of registration and which is kept and maintained by the National Land Survey. The real property register is the one that officially contains information about the land and what is found on it. It is a multipurpose register as it informs all sectors that deal with land. It contains information such as ownership, mortgages, addresses, easements, plans, and land use regulations, tax assessment information, leasehold rights and many more. This shows that it is a property register and not just a land register. According to Högberg (2006), the real property register in Sweden constitutes of five parts as explained below:

I. A General Part

This part is also known as cadastre or real property information. It contains information such as the property’s title, area, and location of the property in terms of the index map and coordinates. This part of the register also shows property formation types (subdivision, re-allotment, merger, partitioning) which have ever been carried out on the property including the dates in which these actions were performed, plans, regulations and ancient remains that affect the property with their respective dates of approval on the property. Information about units from which the property was subdivided is shown in this register, as well as units later subdivided from the property. This part of the register generally gives a definition of what a cadastre is supposed to be. The general part of the real property register is updated by the cadastral authorities.

II. Registration of Ownership

Information entailed in the ownership register part constitutes of legal records which include ownership rights, leases, mortgages, purchase price, and other encumbrances and use rights. This part of the register deals with securing legal rights which are important in land conveyances and other transactions. Therefore this is the part that is most important for property taxation as it is where evidence of ownership and other rights is kept and can be found. The responsibility of updating this part of the real property register is with the land registration authorities.

III. An Address Part

The address part of the real property register contains the address of the property. The address of the property may not necessarily be the same address as the owner. But the owner can use the same postal address as that of the property. Site addresses are usually given to parcels of land or properties and they are the ones used as the property addresses. It is the duty of the municipality body to make sure that addresses are kept up- to-date.

IV. A Taxation Information

This section includes taxation data which is the tax assessed land and building value. The tax assessment value is the total value of the building and value of the land. The person responsible for paying this tax (who is normally the owner of the property) is also shown under the taxation data.

V. A Building Part

The building part of the register has information about the building unit(s). It gives information about nature, type, use, value and situation of the building(s), but no description of the building structure. Each building has a unique identity that is connected to the property identifier. Also apart from the unique identity, the building can be searched through its center coordinates that are geographically defined. This part of the register is interlinked with the property tax assessment register and the building permit process in the municipalities. For this part of the register to be kept up-to-date, the authorization of the property tax assessment register is handled by the tax authority while the building permits are handled by the municipality authorities.

The Swedish real property register is a one-stop collection point for all vital data concerning all properties for land administration purposes. The property register provides the information on land needed to attain sustainable development in aspects of economic, social and environmental. With this type of property register, it’s easy to achieve efficient land markets through secure legal rights and collection of property tax. Also with this kind of property register, effective land use administration is easily attainable as land use regulation and implementation are possible.

2.3.1.2.England

In England, the registration system is a title system that is a modification of the Torrens title system. Each title has a folio number which is the unique identifier known as the title number. The land registry keeps information about the registered property. The register is an up to date record of information regarding title number, physical description of the property, ownership (address and name of owner), property restrictions, and date of purchase, mortgage details, purchase price, land tenure, easements and much other information about the registered property. The land registry is in charge of keeping and maintaining the register. According to Vozarikova (2010), the real property register in England has three parts as described below:

I. The Property Part

This part gives a description of the registered property, any rights that benefit the registered property such as easements and other subordinate rights. The description of the registered property must refer to the title plan.

II. The Ownership Part

This part of the record identifies the owner of the registered property in terms of name and address. It also shows the nature of the land tenure (freehold/absolute, possessory, leasehold or qualified), any restrictions (e.g bankrupt) and notices on the registered land in terms of use or disposal and the price paid for the property. In case the nature of the land is possessed, then the name of the first registered owner of the land is also registered.

III. The Charge Part

This describes the different charges that exist on lands such as tax, lease fee, mortgages, etc and any other rights that adversely affect the registered property. If there are any additional documents containing information about the registered owner, registered charge or the land, they are included here. The online database is accessible to the public if one needs information concerning ownership, maps, encumbrances, and charges regarding any piece of land. Property searches can be possible by the use of the title number, postcode, and address. If you do not have the full address, for example, you can search using the street, town or postcode.

The contents of a real property register of both Sweden and England has a difference in contents of a real property register. This shows that the contents of a real property register is depends on the needs of the country. Even though the contents of a real property registration applied in Sweden and England is vital, it is possible to merge some different contents in one. Therefore, based on the experience of those countries, it is possible to introduce the Ethiopian real property registration system with the contents of property owner information part, real property information part and charge or tax information part.

2.3.1.3.Rwanda

By the late 1990s, the government of Rwanda recognized land as a critical issue in the country’s long-term development. Rwanda’s government Vision 2020 envisioned in the year 2000 and the 2002’s poverty reduction strategy paper listed land as a priority. The Constitution of Rwanda passed in 2003 states ‘every person has the right to private property’ at article 29. The national land policy and the law governing land in Rwanda were consequently adopted in 2004 and 2013 respectively. The law outlined new procedures for land tenure, titling, registering, administering land, and land titles (Gillingham and Buckle 2014).

The implementation of land tenure regularization support program which ran from February 2007 - August 2012 comprising two primary objectives. Firstly, to ensure that all rightful landholders in Rwanda acquired legally valid land title documents so as to minimize disputes in land. This required surveying all land parcels in Rwanda and providing land titles to all rightful claimants nationwide. Approximately 10 million parcels were registered through a low cost, community-based land tenure regularization process over five years (Musharraf, 2013)

Secondly, closely linked to the titling process, was the establishment of a strong land administration system through proper recruitment of staff, training, and equipping the 30 district lands offices. The government of Rwanda put into use innovative communication strategies to ensure that the public was made aware of the new program, which proved effective. The methods were used to appropriately target and communicate to different audiences in different areas; this included land administration staff, district offices, and

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• Hochschule: Ethiopian Civil Service University
• Note: A
• Autor: Tesfaye Kinde (Autor:in)
• Erscheinungsjahr: 2020
• Seiten: 84
• Katalognummer: V976930
• ISBN (eBook): 9783346329141
• ISBN (Buch): 9783346329158
• Sprache: Englisch
• Schlagworte: Property Registration, Property Taxation, Fiscal Cadastre, Municipal Revenue