Can Ghana Get Out Of The Financial Mess With COMMERCIAL REAL ESTATE TAXATION?

Feature Article Can Ghana Get Out Of The Financial Mess With COMMERCIAL REAL ESTATE TAXATION?
MAR 9, 2022 LISTEN

Ghana’s economic dilemma of today was something that was brewing slowly in the last 40 or so years. It can be solved if we are humble enough to learn.

The good book of the Christians, the Bible, has many wise sayings for life. One of my favorites says:

“By humility and the fear of the Lord are riches, and honour, and life”. (Proverbs 22:4)

An Akan proverb also suggests that before a wise man throws a stone he find a firm place to stand first.

The same Bible also says that

“In all labor there is profit, but the talk of the lips tendeth only to penury" (Proverbs 14:23).

Instead of talk of leapfrogging America, let us learn a trick or two as the Japanese and Koreans, and other nations including China, learned in the last half century from America.

Most North American cities rely on commercial and residential real estate taxes for a large percentage of revenues and survival. It is a way of letting the rich boys pay their fair share.

Of course, the city or district (county) government also provides needed underground sewage systems, roads and highways, public parks and libraries and local schools to make the city attractive for home builders and buyers. Some public schools in America compete fairly with the top private schools. Homeowners pay their taxes!

Instead of Ghana relying on collecting money as e-Levy from the poor, why not turn to the rich!

Please let’s remember the rich also pay taxes at the Ports & Harbours when they import their vehicles and trucks and taxation must be sensible else people resist or rebel.

Also remember real estate taxes are the responsibility of the local governments in America. Nobody in America would trust Washington DC with their real estate taxes. No!

Assuming we tax commercial real estate at a mere $1 per sq. ft/year.

A typical 2-bedroom apartment is about 1,000 sf (square feet). A typical 4 storey multi-use commercial /residential complex above (Prestige Hostel as example) could be about 80 such units or 80,000 sf.

The rental taxes alone will be $80,000 per year!

So, let’s multiply that by all the high rises in Accra, Kumasi, Takoradi, etc, and see the math!

I have been watching Ghana closely for over 5 decades. If is my strong opinion that our Book-long Economists over the years have failed the nation by not learning from other nations instead of the big academic talk and leapfrogging! No!

Let us

  1. Design computerized databases with property ID systems, using existing land plots and simple street and property numbering systems as used elsewhere in the West (no leapfrogging).
  2. Include the commercial properties listings with their area in square footage.
  3. Let parliament pass a fair rate for Commercial Property. Then
  4. Start Taxing the rich property owners.

Problem solved!

If you can make one big Building cough up $80,000 per year, please count all the commercial properties you see in Accra.

Ghana could be counting on solid revenue and would not need to go to the IMF and World Bank. We could develop an underground sewage system for each town and create hundreds of thousands of jobs!

With smart strategic knowledge and thinking, and some humility to consult our own experts with relevant knowhow, Ghana could also be funding our schools and colleges and even have some left over to provide small loans to students as needed.

A word to the wise if our leaders are sincere! If they do not stop the boasting and do not seek help and stop the self-interest dealings encumbering the nation with debts, they should be blamed when the nation collapses and the day of reckoning comes.

May God bless our homeland Ghana.

Dr. K. Danso (Mar.8, 2022)

Engineer & Lic. Real Estate Broker, California, USA (Retired but Consulting only).