Property rates and rent taxes will soon be reviewed to reflect their current economic value, Dr Larbi Siaw, Tax Policy Advisor at the Ministry of Finance and Economic Planning has said.

Property income taxation has long been seen as an area largely neglected by the country's tax authorities.

Its share of GDP in Ghana is 0.03 percent, compared to an average of 1.8 percent in Organisation for Economic Cooperation and Development (OECD) member-countries.

In the UK, taxes on property are worth 4.2 percent of GDP, while in the United States the ration is 3p percent.

However, Ghana's recent fiscal challenges -- with less-than-expected tax revenues and a hefty budget deficit -- have caused attention to shifted to property taxes.

Last year, President John Mahama in a bid to tackle one of the key impediments to efficient property tax collection directed the Ministry of Local Government and Rural Development to make certain that all streets in the country are named, and houses also numbered, within 18 months..

This project, Dr. Siaw believes, will provide the requisite data for government to begin a review of the current low property and rent taxes.

"In line with the street- naming and the cadastre being assisted by the Canadian government, if you have a full map of Accra properly named and the properties valued, then we have a basis for rate-change," he told the B&FT in an interview.

“The next in line is rent tax. When you walk around Accra and other parts of Ghana, all the new high-rise buildings coming up, if we are able to tax them properly then the tax level will remain the same.

“With property rates, I am not saying it should be doubled, but it should be appropriate to the economy.”

He emphasised that the aim is not to introduce new property taxes but to review and enforce existing ones as well as expand the base.

There is currently a statutory 8 percent tax on annual gross rent realised by residential property owners, while the withholding tax on commercial rent is 15 percent, according to the 2014 budget.

While rent taxes are collected by the Ghana Revenue Authority (GRA), property taxes - which are paid annually on the value of the property - are collected and administered by metropolitan assemblies.

The rates range from 0.05-1 percent and depend on the classification of the .area where the property is located.

There is, however, weak enforcement of the taxes - property owners either do not pay at all or can defer payment for years — and a general perception that properties are grossly undervalued by the

assemblies, which lack personnel armed with skills and logistics to undertake fair valuation of properties in their jurisdictions.

For instance, in Accra, the property rate for Residential Class 1A, an area that covers Airport Residential Area, East Legon, Ridge and Roman Ridge, is 0.17 percent, and the amount, paid cannot be less than GHC 115.

At this rate, a property worth GHC1 million - which is very common to . find in the areas under Class 1A - must pay GHC 1,700 to the Accra Metropolitan Assembly. But in reality the properties in these areas are often undervalued, and the owner of a GHC1 million home is likely to pay less than GHC500 every year.

It is believed that local authorities such as the AMA will give a-significant boost to their, finances if they are able to adequately tax properties within their jurisdiction.