The local government in Ghana has a significant opportunity to generate substantial revenue from property owners and real estate developers. However, a major challenge remains—the under-collection of property rates. Many high-value properties in Ghana contribute far less than their worth to local government revenue. For instance, a house valued at $400,000 only pays GH¢500 in property taxes annually, a figure that does not match the potential tax revenue such properties could generate.

Expensive Real Estate Areas in Accra

Accra is home to some of the most luxurious and high-value real estate properties in Ghana. Some of the most notable areas include:

East Legon – Known for its upscale residential and commercial properties, this area houses some of Ghana’s wealthiest individuals. For instance, if properties in East Legon valued at more than a million dollars were to pay at least $5,000 in property taxes, Ghana could generate enough revenue to reduce or eliminate its dependence on external borrowing.

Why Uncaptured Property Tax?

Individuals who own properties are politically connected, highly profiled businesspeople whose financial details are often undisclosed. Lawmakers, for their personal interests, do not want to capture this revenue line item.

These same individuals own commercial properties in high-end neighborhoods and are also responsible for making the laws. However, none of them deem it fit to enforce regulations that would require them to pay fair property taxes.

This is not an oversight but rather a deliberate move to protect the wealthy property owners. It is not about party A or party B—rather, all political parties share responsibility in enacting, enforcing, and implementing legislation to ensure that the wealthy pay their fair share of property taxes.

Other high-value real estate areas include:

Cantonments – A high-end neighborhood with embassies, luxury apartments, and high-class residences.

Airport Residential Area – A prime location with modern real estate developments, often attracting diplomats and business executives.

Trassaco Valley – One of Ghana’s most expensive gated communities, featuring multi-million-dollar mansions.

Labone – A blend of old-money residences and modern luxury apartments, making it a sought-after location.

Despite the high value of properties in these areas, the property rate system remains inefficient, leading to massive revenue losses.

The Role of Real Estate Companies

Several real estate companies operate in these prime areas, developing high-value properties. Some of the major players include:

Trassaco Group, Devtraco Plus, Regimanuel Estate, Denya Developers, Clifton Homes and Chain Homes.

These companies build properties worth millions of dollars, yet the local government’s revenue from property rates does not reflect the true market value of these properties. Proper valuation and enforcement of property taxes could generate significant funds for infrastructure development.

Lessons from the USA and the UK

Ghana can learn from countries like the United States and the United Kingdom, where property tax systems are well-structured and contribute significantly to local government revenue.

In the United States, property taxes contribute approximately 31% of total state and local tax collections. These funds are used to build schools, roads, and other essential public infrastructure. Examples include:

Montgomery County, Texas – A $480 million road bond was proposed to fund over 70 mobility projects, addressing increasing traffic concerns and managing population growth.

Sanford, Michigan – The city received over $58,000 in property tax payments from a single business, which was allocated to future development projects and flood recovery efforts.

Mecosta County, Michigan – A $6 million drainage project is being funded through property tax assessments and state contributions.

Similarly, in the UK, property rates are determined based on council tax bands, ensuring properties are taxed appropriately according to their value. This system provides a steady flow of revenue to local authorities.

The Way Forward for Ghana

To maximise revenue collection from real estate, Ghana must:

1. Update Property Valuation Systems – Accurate property assessments should be conducted to reflect current market values.
2. Strengthen Enforcement Mechanisms – Local governments should have the authority to enforce property rate payments effectively.
3. Leverage Technology – Digital platforms can improve efficiency in property rate collection.
4. Encourage Compliance Among Developers – Real estate companies should be engaged in discussions to ensure fair taxation.
5. Comprehensive Numbering and Documentation – Every property should be properly registered and documented to facilitate effective taxation.

How Property Taxes Can Eliminate the Need for External Borrowing

If Ghana efficiently collects property taxes, the government would no longer need to borrow funds for local governance. Community water, healthcare, public education, sanitation, and local road construction could all be funded through property tax revenue.

For instance, in the U.S., the finishing of a home influences tax rates. If a road leading to a house is concrete instead of asphalt, the tax rate increases.

In Ghana, some people obtain building permits but sell the property before completion, often avoiding appropriate taxation. Proper regulations can prevent revenue loss in such cases.

Property tax collection is an untapped goldmine that could significantly boost Ghana’s economy. If properly structured, it can become a major source of revenue, reducing dependency on external borrowing and improving local infrastructure. Ghana must take inspiration from countries like the USA and the UK and implement reforms to ensure that property taxes are fully captured and utilized for national development.