LAs property taxation

Property tax is a significant source of revenue for the Local Authorities (LAs). In the current 2012/13 LA budget, out of a total projected locally generated revenue estimate of K7.4 billion, property tax or property rates as it is commonly referred to, is accounting for K4 billion which translates into 54 percent of the local revenue budget.

In this edition, therefore, we shall focus our discussion on property taxation as it applies to LAs in Malawi.

Property taxation by LAs is an area that has generated a lot of interest and debate among various stakeholders.

Today, we shall specifically look at this topic in the context of LAs in Malawi.

The Local Government Act (1998) empowers LAs to levy tax on assessable property in areas designated as rateable.

Currently, property tax (commonly referred to as property rates in Malawi) is levied by the city councils of Blantyre, Lilongwe, Zomba and Mzuzu; the municipal councils of Luchenza and Kasungu; the town council of Mangochi and town centres in the district councils of Karonga, Salima, Dedza, Balaka and Machinga (covering Liwonde Town centre).

Assessable property

All land within a local government area, together with all improvements of every description situated thereon is deemed as assessable property. The following, however, do not qualify as assessable property:

a) All streets;

b) Sewers and sewage disposal works;

c) Land and improvements used directly and exclusively as a cemetery or burial ground;

d) Land and improvements used as a public open space; and

e) Railway lines.

LAs shall, however, remit in full the payment of property rates on:

a) Vacant and unalienated public land;

b) Land and improvements used directly and exclusively for public religious worship;

c) Land and improvements used directly and exclusively as a public library or public museum;

d) Land and improvements owned by a hospital or other institution for the treatment of the sick;

e) Land and improvements owned by an educational institution; and

f) Land and improvements owned by a club or society or other institution for purposes of sport.

It should, however, be noted that remission of full payment of property rates on the above properties shall not apply to any separate buildings used as residences of staff or the use of such premises for profit or trading related activities.

No rate shall be levied in respect of assessable property owned by diplomatic missions.