Day 1-Session 2-African Perspectives-Ghana

Revenue Generation in
STMA, Ghana under BMGF Funded
IncluCity Program, a program under
Cities Alliance management
Revenue Management Master Class
13th-17th October 2014 (Durban, South Africa)
by
Ishmael Adams (Program Director); and
Mathew Kirk-Kwofie (Metro Finance Officer)
Outline
• Introduction
• Annual Revenue Improvement Action
Planning
• Property tax (rate) and Business
Licensing Reforms
• Conclusion
2
Introduction
• Local governments are tasked with :
• provision of services to its citizenry
• coordination of local economic development
• Financing development in Municipalities:
• Internally Generated Revenue (IGF) Sources (rates, licenses, lands,
rent, investments and fees, fines and charges)
• External Revenue Sources (DACF, DDF, GUMP, Grants)
• IGF is the only source which MMDAs can directly influence with the highest
level of autonomy
• MMDAs in Ghana are mandated (local government Act 462, 1993, section
10) to develop yearly Revenue Improvement Action Plans (RIAPs):
• to facilitate improved revenue generation
• requirement for the Functional Organizational Assessment Tool
• Municipal finance Bill truncated along the line
3
Introduction
Definition of Revenue Items at the Assemblies:
4
Revenue Item
Definition
Breakdown
Rates
Rates are basic, property and special taxes payable by the public,
public corporations and organizations owning property in the area
of jurisdiction of the District Assembly.
These include Basic Rates (a link of poll tax which
is levied on every adult in the active age group),
Property Rates (levied on landed properties in the
area of authority of the Assembly) and special
Rates (levies on special projects in the district)
Fees, Charges
and Fines
Fees are tolls, levies and dues mostly generated from the use of
markets, lorry parks and sanitation facilities of the Assembly. Fines
are revenues generated from the imposition of court and spot fines
on offenders.
These are; Markets Toll, Marriage/Divorce, Court
Fines/Spot Fines
Lorry Parks, Cemetery Burial Permit
Entertainment & Road Blocks, etc.
Licenses
These are taxes generated from issuance of business operating
permits from the Assembly. Metropolitan, Municipal and District
Assemblies are mandated as licensing authority for a number of
activities within their area of jurisdiction.
They include hawkers’ license, extension of
houses, hotels and restaurants, lorry parks
overseers, self-employed artisans etc.
Lands
Lands are revenues generated from payment of royalties from stool
lands, minerals and timber resources.
These are; royalties from stool lands, minerals and
timber resources and Building Plans/Permit.
Rent
Rent involves the payment for the utilization of the Assembly’s
properties or facilities which may be landed or mobile in nature.
Key items within this categorization include the
utilization of grounds, classroom, stores, stalls,
bill/sign boards and Lorry parks etc.
Investments
Investments are revenue derived from trading activities, interests
and dividends from investments and treasury bills or government of
Ghana bonds.
They constitute; interests and dividends from
investments and treasury bills or government of
Ghana bonds.
Miscellaneous
These are unspecified receipts that cannot directly be classified
under any of the key revenue items.
Examples are; Sale of Unserviceable Vehicle,
Recovery of Overpayment, Unspecified Receipt,
Tender Forms, Donations etc.
Introduction
Metro Profile
• STMA land area: 219 km²
• Total Population:559,548
(PHC 2010)
• The population is currently
projected at 635,956
• Female: 286,112 (51.1%)
• Male: 273,436 (48.9%)
• Population Density: 2555
persons/km2
5
Administrative Status:
Regional Capital
Economic Activities:
• Industry: 19.1%
• Agriculture: 21%
• Service: 59.9
6
Challenges in STMA that necessitated
interventions
i.
STMA had no RIAPs and did not get corresponding scores
for the national assessment on FOAT
ii. STMA had no objective and defensible basis for
determining business licensing fees
iii. General Revenue was low and they needed more funds
to respond to the increasing advocacy from the poor
neighbourhoods in particular.
7
RIAPs Processes
8
Process
Who
Performance review of previous
IGF/RIAP
This is carried out at a review
workshop with key revenue staff of
the Assemblies through the
facilitation of a Consultant
Identifying revenue items,
setting targets for the
generation of IGF in the next
year and Outlining key activities
to be implemented to enable
the Assemblies achieve the
targets set
This is undertaken at second
workshop with revenue staff of the
Assemblies through the facilitation of
the Consultant for the purposes of
gathering the required data for the
next RIAP preparation.
Drafting and Validation of
RIAPs
A validation workshop is organized
for the revenue staff to comment on
the Draft RIAPs before they are
finalized by the Consultant.
Presentation of Final RIAPs
At an arranged meeting, the Final
RIAPs are presented to the
Managements of the Assemblies by
the IncluCity Project.
Implementation, Monitoring and
quarterly review of RIAPs
This process is facilitated by the
RIAP Implementation Teams at the
Assemblies.
Support
The IncluCity Project supports this
process by engaging the right Consultant
for the review and working with the
Assemblies to organize the workshop.
The IncluCity Project validates the RIAPs
as well as provides resources for the
workshop.
IncluCity Project supports this process
by augmenting the logistics of
Assemblies to ensure effective revenue
collection/implementation of the RIAPs.
The Project also works with the
Assemblies to ensure regular quarterly
review of the RIAPs.
Gallery – RIAP Workshops and Presentation of Logistics for RIAP Implementation
RIAP Review and Data Gathering Workshops - STMA
RIAP Validation Workshop
RIAP Quarterly Reviews – STMA Respectively
9
2014 RIAP Strategies for Revenue Generation –
STMA
Revenue Heads Objectives
Implementation Framework
Activities
Expected Outcomes Implementation Strategies
Monitoring Framework
Revenue Heads Activities
Indicator
Frequency of
monitoring
Responsibility
Some RIAP Activities












10
Update property roll database
Street naming and property addressing system in selected Communities.
Intensify collection of property tax arrears from both commercial and residential properties
Establish frequent interactions between the assembly and the private sector companies collecting revenue on its
behalf
Upgrade facilities and services at 2 No. major markets and lorry parks
Sensitize traders and drivers at the markets and lorry parks on the need to honor their tax obligation
Update the assembly database on all existing businesses
Establish a taskforce to identify defaulting businesses and collect BOP arrears
Intensify monitoring of physical developments to ensure developers have acquired appropriate building permits
Update the database on all rentable facilities and properties of the assembly.
Prepare tenancy agreement between the assembly and all individuals and businesses who have rented assembly
properties
Eject and prosecute rent defaulters
Gallery – Small Grants Projects serve as incentives to communities to be engaged
Ngyiresia School Urinal, Essipon Water Storage Facility and Bakado Toilet Extension/Renovation – STMA 2012
11
Analysis of Revenue Collection Performance – STMA (Actual Versus Budgeted) 2011 - 2013
2011
REVENUE
2012 (RIAP YEAR)
%
ITEMS
Budgeted
Actual
achieved
2013 (RIAP YEAR)
%
Budgeted
Actual
achieved
REMARKS
%
Budgeted
Actual
Achieved
The general increases in revenue in
2012 and 2013 is attributed to:
1. The improvement in efficiency of
99.67
internal revenue collection
RATES
695,000.00
554,338.46
79.76 890,000.00
770,464.17
86.57 1,025,000.00
1,021,656.86
management system of the Assembly
through RIAP implementation.
93.55
LANDS
185,500.00
236,474.02
127.48 225,500.00
272,436.00
120.81 340,000.00
2. The 2013 phenomenal growth in
318,057.13
miscellaneous occasioned by a lump
FEES,
CHARGES
98.38
&
FINES
636,000.00
681,414.00
107.14 693,000.00
742,042.60
107.08 1,130,500.00
to the Assembly as part of the
1,112,135.24
company’s Cooperate Social
94.81
LICENCES
1,235,200.00
1,222,554.81
98.98 1,297,100.00
1,426,513.31
109.98 1,099,400.00
sum payment made by GHACEM Ltd
1,042,362.29
Responsibility.
3. Improved database of businesses
resulting in effective distribution and
75.10
RENT
174,100.00
124,429.18
71.47 178,000.00
112,631.66
63.28 156,830.00
collection of bills.
117,777.98
4. However, the declining revenue from
investments in 2012 and 2013 is
INVESTMENT
36,100.00
29,307.68
81.18 36,100.00
14,855.16
41.15 -
-
mainly due to the absence of clear
policy direction (from central
MISCELLANE
OUS
53,100.00
137,463.21
258.88 43,100.00
57,273.06
132.88 962,000.00
967,212.88
100.54
Government) on the investment base
of the Assembly making it ensure for
the Assembly to engage in some
TOTALS
12
3,015,000.00
2,985,981.36
99.04 3,362,800.00
3,396,215.96
100.99 4,713,730.00
4,579,202.38
97.15
levels of investment.
Growth Pattern of Revenue Items (2011– 2013)
• General growth in total revenue collected in the RIAP Years of 2012 and
2013 compared to 2011 revenue generation.
Total IGF Growth Trend in STMA (2011 to 2013)
IGF Growth Trend
13
PROPERTY TAX REFORMS IN STMA
UPDATES
14
Background
Situation Before
• Paper Based Manual System which is difficult to
update
• Layouts are sketches not drawn to scale and lack
the proper orientation
• Layouts have no linkage to the revenue database
• LVD block maps are sketches without proper
orientations
• Street and parcels without names and numbers
• Property valuation uses the replacement cost
method (floor area, type of material used, etc,)
15
Collection
of data
Existing Billing and Collection Process
Data processing
by MIS
Transfer of the
Data to Revnet Ltd
Setting of
targets by DA
Approval by
General
Assembly
16
Generation
of Bills by
Renvet
Final Draft
IGF
Estimates
Distribution of Bill be
Revnet team and
Assembly collectors
without proper
identification system
Payment of bills at
collection points
Submission of
returns to
Assembly Finance
Office
Review of the
draft IGF
estimates by
F &A and
Revenue
Subcommittees
Use the data
from the
analysis for the
preparation of
draft IGF
estimates
Budget Officer
accesses information
from Finance and
Revnet Offices for
revenue performance
analysis
Situation Now: Establishment of GIS Unit
Setting up a GIS Unit (July-August, 2012)
• Renovation of PPD Drawing Unit – STMA
• Computers, Printers & Scanners -GC
• GIS Software – GC
• Training of staff
Capacity
Ten (10) Desktop Computers
Ten (10) UPS Machines
One (1) Server Machine
One (1) A3 Scanner
One (1) A3 Officejet Printer
17
Digitization of Parcels from Orthophoto/Layouts
18
Street Addressing
Consultations and Public Education
• Stakeholder consultations
 Chiefs, Assemblymen, community leaders
 For Street Names, compilation of existing
street names
• Radio jingles & discussions on 4 local Radio
Stations
• TV News Coverage (by Sky TV)
• Community announcements via STMA
Information Vans
Preparation of Maps
• Naming of streets
• Numbering of
properties
• Preparation of
data collection
maps and
questionnaires
20
• Fieldwork
Training of 160 fieldworkers
Participants at the 6-day training workshop were trained in:
• Basic Map Reading
• Questionnaire Interviewing Skills
• Stencilling of Street Names & House Numbers.
21
• Fieldwork
• Stenciling of House
Numbers and Street
Names
• Collection of Property and
Business data
• Lasted from June 2013 to
May 2014
22
Data Input and Scanning
• Field Verification of Geographic data
• Editing of Geographic data
• Scanning of property and business record
sheets
• Editing of the scanned record sheets
23
Linking of Property Values to the property addresses(Geocoding)
• Identification of LVD blocks and
valuation numbers on the maps
• Matching the property addresses to
the valuation numbers
• Entering property addresses into the
LVD database
• Restructuring of database and linking
it to the GIS map
• Final database:
 Property: 35157
 Business: 5411
24
UPN
valno
countyno
suburb
zcode
pucode Owner's name
occupier
valdate
inspdate
ratevalue
642-0545-0010
SK11010012 41Boundary Rd
Property Address
7D
SEKONDI
R2
RG
GHANA POLICE SERVICE
OWNER
01-Jan-10
17-Sep-12
385639
642-0546-0018
SK11011003 114STMA Rd
A 7A
SEKONDI
R2
OG
W. A. E. C.
OWNER
01-Jan-00
15-Sep-12
224559
642-0545-0050
SK11011011 3Heave Ct
-
SEKONDI
R1
OQ
GHANA EDUCATION SERVICE
OWNER
01-Jan-00
15-Sep-12
208725
641-0545-0309
SK11023004 12Philip Archer Ave
24A/17
SEKONDI
R2
RP
GEORGE ACQUAH
OWNER
01-Jan-10
13-Sep-12
336267
637-0542-0169
EK08006010 1Twin City Cr
8/9
WINDY RIDGE
HI
IP
OWNER
01-Jan-10
14-Nov-12
540918
637-0542-0170
EK08006009 16Paa Grant Blvd
7/9
WINDY RIDGE
HI
IP
TAKORADI FLOUR MILLS
OWNER
01-Jan-10
14-Nov-12
634458
637-0542-0171
EK08006008 18Paa Grant Blvd
6/9
WINDY RIDGE
HI
IP
PARK AVENUE ROUTERS LTD
OWNER
01-Jan-10
14-Nov-12
349623
637-0542-0174
EK08006007 22Paa Grant Blvd
5/9
WINDY RIDGE
HI
MX
SETH GYEDU
OWNER / FAMILY
01-Jan-10
14-Nov-12
338833
642-0545-0427
SK11020030 13Kwamina Anaesi Blvd
39/12
SEKONDI
R2
OP
01-Jan-10
12-Sep-12
229795
639-0542-0150
TD07040025 9Catechist Daadze Ave
120 - 123/2
NEW TAKORADI
R3
RP
L. N. USSHER
OWNER / FAMILY
01-Jan-10
09-Aug-12
186034
638-0542-0151
TD07024008 5Monkey Hill Ave
96A/12
MONKEY HILL
MD
RQ
VODAFON GHANA
OWNER
01-Jan-10
24-Jul-12
218190
636-0542-0061
EK08001001 32Paa Grant Blvd
PT. 1
WINDY RIDGE
HI
OP
BAKER HUGHES GHANA LTD
OWNER / TENANTS
01-Jan-10
18-Jun-12
4071840
636-0542-0094
EK08001004 10Independence Ave
3/9
WINDY RIDGE
HI
OP
ANIMENS
TENANTS
01-Jan-10
16-Nov-12
279525
636-0542-0095
EK08001003 8Independence Ave
1C/9
WINDY RIDGE
HI
IP
MULTIWALL PAPER SACKS LTD
OWNER
01-Jan-10
16-Nov-12
1194887
636-0542-0097
EK08006001 30Paa Grant Blvd
2A/9
WINDY RIDGE
HI
IP
TAKORADI FLOUR MILLS
OWNER
01-Jan-10
14-Nov-12
219712
637-0542-0147
EK08007017 11Twin City Cr
WR. 1A
WINDY RIDGE
R1
LP
MR. YIADOM BOAKYE-DANQUAH
OWNER
01-Jan-10
19-Oct-12
187520
Training of STMA staff on LUPMIS IGF Component
25
Participants
• MIS Dept.
• Finance Dept.
• Budget Dept.
• Development Planning
• TCPD
• GIS Staff
Property Rate model & LUPMIS
• Installation of
LUPMIS
• Set-up of network
• Creation of
accounts for staff
for access to
LUPMIS
• Loading of
database into
LUPMIS
26
Property Rate model & LUPMIS
• Determination of rate
impost for properties
• Determination of
business permits using
factors
• Generation of property
rates and business
operating permits
• Generation of demand
notice
• Demarcation of
property rate collection
zones
27
Property Rate model & LUPMIS
•
•
•
•
Printing of bills
Distribution of bills
Entry of payment
Continuous updating of GIS database
(Capturing of new properties that might
result from subdivision and
consolidation)
• Entry of payment information
Indicators
SEC A.
1
Location
Variables
Weight as in % points
Basic Indicators & Variables applicable to all businesses
Prime
Good
Fair
2
No. Of employees
Permanent employees only
Over40
31 to 40
21 to 30
11 to 20
0 to 10
3
Impact on the environment
100
50
30
20
100
30
25
20
15
10
200
Pollution
Noise
air
Water
Green gas emission
Extent of roal use and municipal services
Volume of waste generated
4
Type of business office operations
Main office
Area office
Branch office
Agency
5
28
Nature of the business enterprises
International
National
Local
Grand Total Weights
30
30
30
40
40
30
100
40
30
20
10
100
50
30
20
600
Sample Bills
29
Collection
of data on
Properties
and
Businesses
Reformed Billing and Collection Process
Data processing
by PPD
LVD, Finance and
MIS provide
information to
Budget and Rating
for target setting
Budget and Rating
Input FFR and
targets
Approval by
General
Assembly
30
Data accessible to
Finance, Budget,
MIS and LVD
Generation
of Bills by
Revenue
Final Draft
IGF
Estimates
Distribution of Bill by
Assembly collectors
based on demarcated
zones and property/
business spatial
information
Payment of bills at
10 active collection
points
Submission of
returns to
Assembly Finance
and MIS Offices
for processing
Review of the
draft IGF
estimates by
F &A and
Revenue
Subcommittees
Use the data
from the
analysis for the
preparation of
draft IGF
estimates
Budget Officer
accesses information
from the system for
revenue performance
analysis
Status Maps
Red: Not paid
Green: No Property/Fully paid
31
Implementation in Pilot Areas
Phase I
32
Pilot Phase I (Chapel Hill)
• Bills printed for Pilot Phase I (Chapel Hill)
 Property Bills: 1758
 BOP Bills: 1973
• Collectors oriented on map reading and street addressing system
• Collectors currently validating printed bills using the maps and
making necessary updates
33
Benefits of the System
• Assign specific zones to revenue collectors and their supervisors
• Know the exact revenue to be generated
• Know the coverage area
• Know areas that are not paying their rates so that they can be targeted
for public education
• Location based tracking of defaulters and revenue collectors
• Monitor the performance of revenue collectors and supervisors
• Easy location of property rate payers since they will be linked to
physical addresses
• Use of maps by the revenue collectors
34
Emerging Lessons
• Communication and Citizen Participation Need to Inform Taxation Reforms:
Effective and fair taxation results from an implicit bargain between citizens
and government.
• Software Implementation Requires Gradual, Patient Approach: Developing
and implementing new ICT systems with local government requires a
gradual approach and considerable patience.
• Quality Data is Essential: Cities do grow organically, but it is critical to have
accurate data on all particles of the organism – maps, data, street names,
who lives where, what services they need
35
36