Background of the Program
Decentralized governments will generally be more accountable and responsive to citizens' needs and preferences. Increased accountability associated with decentralization can only be assured when sub-national governments have an adequate level of autonomy and discretion in raising their own revenues.A myriad of reports on fiscal decentralization design have identified the property tax as one of the best candidates for a mainstay at the sub-national level, especially for local governments (Bahl R. and Martinez-vazquez 2000).
In many developing countries such markets don't exist or may exist only for certain classes of properties. In the absence of such efficient real estate markets, the property tax should be based on one of the non-market approaches (UN HABITAT 2011).
As a show case for example Developing countries generate significantly less property tax: 40% of local government revenue, 2% of total government revenue and 0.5% of GDP. The corresponding figures for Kenya are 22%, 1.3% and 0.3% respectively (Roy, 2000).
Ethiopia is one of the countries with Federal form of government and is politically structured into nine regional states and two city administrations (FDRE, 1995). The regional states and city administration have been constitutionally empowered to levy and collect tax, generate revenue from both tax and non-tax sources to finance regional and city level development projects.
However, the regional governments have been highly dependent on intergovernmental fiscal transfer, in the form of grants, from the federal government and there have been efforts made to help regional states and city administration-including municipalities, generate adequate revenue to finance development projects under their jurisdiction.
Now a days the Ministry of Urban Development, Housing and Construction is moving towards realization of a modernized urban property valuation and taxation system across the urban centers of the country through findings of research conducted in three pilot cities namely Dire Dawa, Mekelle, and Bahir Dar on issues regarding real Property identification and valuation, capacity design and building and public engagement.
The findings of the research indicated that with the current existing system in Ethiopia in general and the three cities in particular, it is difficult to bring total shift in property market, valuation, and assessment and taxation system. Transition period is required as time factor, skilled human power with required knowledge and attitude should be fulfilled through human power development and minimum functional support system should be in place. Consequently, Dire Dawa University as one of second generation 13 public universities has taken the lead in launching a new department among others entitled as Land and Real Property Valuations.