By G. M. Wawanya

Introduction

Property tax emanates from two sources, namely the capital value of the property and the rate in Kwacha. The capital value is determined by a registered valuation surveyor and the rate in Kwacha is determined by the council itself. By multiplying the two, one gets the rateable value of the property. The rate in Kwacha is a very small fraction and, usually, land has a lower rate than improvements. Though small, the rate in Kwacha matters because when multiplied with the capital value, the resultant figure is quite large and forms the incidence of tax or the rateable value of the property.

Background

Blantyre City Council has recently published a notice in which it has indicated that it is changing the rate in Kwacha; that is, shifting it upwards, thereby increasing property rates. The notice gives ratepayers merely two weeks.

It must be noted that the change is very legal and is in accordance with the law.

However, property owners have already been complaining about very high city rates; that the last Quinquennial valuation exercise was not done well and that objections to the valuers so inserted were not exhausted.

Instead of dealing with the queries, the council proceeds to increase the rates further, thereby contributing to the rise of the cost of living in the city. All this is being done when there are complaints of poor service delivery and the general state of public infrastructure in the city is at its lowest standard.

There is also the issue that it is the same property owners that bear the blunt of this increase. Why not increase the tax base by including areas that are outside the city boundary (peri-urban) such as Mpemba, Chileka, Ngumbe, Lunzu, etc, into the city so that they become rateable. Such a move [changing the rate in Kwacha] is insensitive and politically naive in that at a time the government is trying hard to lower inflation, an arm of the same government is doing the opposite.

Increasing property rates will lead to an increase in rentals as property owners will simply increase the rents of their property. After all, the percentage of property ownership in Malawi’s urban centres is very low, ranging from 10 percent to 15 percent.

Way forward

The appropriate way forward is for Blantyre City Council to reverse the intended action and, instead, pursue the alternative, which is to extend its boundaries and increase the tax base.

Conclusion

Merely a year ago, Blantyre City Council officials held a symposium titled ‘Taking The City Back to The People’. Today, city residents are complaining about poor service delivery, the poor state of public infrastructure, non-existent enforcement of planning regulations and the city’s own byelaws and rising cases of corruption.

Is this what they mean by bringing back the city to residents?