Monzawia's is a lower-middle income country with a popalation estimated at 40 million, with a large majority living and working in agriculture. There are an estimated 3 million taxable properties, approximately 40% of which are located in the capital city and 7 larger towns, with the remainder located in smaller townstipsivillages and in rural arcas. The deeds registration system is only available for the surveyed areas within the urban cities, and some rural land is structured as traditional "community land", not attributable to any single individual. The Central Government applies a 15% real property transfer tax to offset the costs of land transfer registration. A recent itudy has identified that many property transactions are not reflected at actual market value or are not publicly recorded at all - as required by law. A World Bank-funded study undertaken for the Ministry of Agriculture, utilizing recent aerial pbotographs, estimates that there are 40,000 large commercial farms and over 600,000 small subsistence farms. Currently the local govemment property tax revenue in Monkanis is about 0.02% of GDP. Local Governments receive about 70% of their funding from the central government transfers. The property tax accounts for about 35% of the local government own source revenues, with the remaining funds coming from an assortment of licenses, fees and charges. There appears to be large variations across the local governments, with the capital city generating close to 70 percent of total property tax revenues in the country. In urban arcas there is a special tax on vacant land, levied at 5%. The property tax is levied on land only, restricted to those areas designated by the Minister of Local Govermment as being taxable. The tax rate is determined by the central government in law, applied aniformly for all properties at 0.1% of the estimated capital value of property (not the rental value). Property valuations are carried out by the Central Government Valuation Office (GVO). According to the Monzanis Property Valuation Association, there are only 25 registered valuation surveyors in the country of which only 4 are employed by the GVO. The law states that property valuations for property tax purposes must be undertaken every 8 years based on the capital value, not the rental value. In practice, however, most valuation rotls are older than 12 years. Furthermore, these valuation rolls largely cover only the surveyed areas in the capital city and larger towns. The law stipulates that every taxable property must be physically inspected by the registered valuation surveyor to ensure accuracy of the property information. Exemptions are granted to government properties, government-owned enterpnises (such as the National Railway Corporation, National Strategic Metals Corporation and the National Electricity Agency), as well as to religious, sports clubs, labor unions, and charitable and educational institutions. Private (profit making schools) are given a 50% tax rebate. Foreign diplomatic properties, including residences, are tax exempt. Agricultural land is exempt to protect small farmers and all owner-occupied residential land is tax exempt. Under the Agriculture Promotion Act, land used for large-seale agrieulrural-processing industries are given a valuation deduction of 25%. To booss tourism, The Tourism Act of 2015 provides a 10-year exemption for property used by the tourism industry. Land which has structures "under construction" receive a 50% rebate, but will be fully taxed once the buildings are fully complete. Furthermore, the Minister responsible for Local Government has discretion to grant additional exemptions in "special circumstances". While the GVO is responsible for valuing the properties, local govemments are responsible for all other property tax administration functions, including maintaining the property tax roll, tax liability assessment, billing. collection and enforcement and taxpayer service. The property tax valuation appeal system is the respossibility of the GVO. The majority of local governments are in serious financial trouble doe to significint under-performance. The average property tax revenue collection ratio is only 30 percent. The local govemments are allowed to churge 13, per month for late property tax payments up to a period of 2 years. The prime interest rate is 24% per year. Tax payment arrears amount to the equivalent of mote than a 18 months of tax revenuc, and are aged from 180 days to 10 years. In many instanees members of parliament, elocted councilors and promineat businesses are among the defaulters. A few councils have tried to publish the names of delinquent taxpayers in local newrpapers and on public notice boards, whereas others try to utilize civil courts. However, the court processes seem to be lengthy, cumbersome and expensive. Tax liens as well as the seirure of immovable and movable property seizure and public auctions are allowed. However, these mechanisms are seldom, if ever used. Several laws firms are proposing to assist in the collection function for 20% collector's fee, In the past the Association of Local Governments had suggessied to transfer all arrears to the CG Taxation Department to have them assist on collecting the outstanding arrears but this has not yet been agreed by the Rural taxpayers in especially the larger districts complain that local government offices are not accessible to them and that service delivery is lacking, thus see no reason for them to pay property taxes. In the urban areas the complaints are usually that taxpayers have to wait hours to pay only to be confronted by rude officials. Many taxpayers postpone payment until they either need to transfer their properties and/or to receive a local government service. There also seems to be a lack of understanding of the responsibilities and rights of taxpayers under the property tax system. The local newspaper has exposed cases of corruption, some involving fake receipts, as well as mismanagement of the local government budget leading to a lack of credibility in the transparency and accountability of the local government system. Parliament is holding a public hearing to gather information to be used in this reform process. You have been asked to write an individual response (maximum 4 pages) addressing the following issues, and to be ready to discuss the following issues: (1) What are the major problems facing the Mapzapia property tax system. (2) What policy changes would you recommend regarding the tax base and tax rates? (3) What administrative reforms would you recommend to improve the coverage ratio, the valuation ratio and the collection ratios? Outline your recommended property tax reform strategy in Moxzania (e\& what are the key intervention priorities?) Monzawia's is a lower-middle income country with a popalation estimated at 40 million, with a large majority living and working in agriculture. There are an estimated 3 million taxable properties, approximately 40% of which are located in the capital city and 7 larger towns, with the remainder located in smaller townstipsivillages and in rural arcas. The deeds registration system is only available for the surveyed areas within the urban cities, and some rural land is structured as traditional "community land", not attributable to any single individual. The Central Government applies a 15% real property transfer tax to offset the costs of land transfer registration. A recent itudy has identified that many property transactions are not reflected at actual market value or are not publicly recorded at all - as required by law. A World Bank-funded study undertaken for the Ministry of Agriculture, utilizing recent aerial pbotographs, estimates that there are 40,000 large commercial farms and over 600,000 small subsistence farms. Currently the local govemment property tax revenue in Monkanis is about 0.02% of GDP. Local Governments receive about 70% of their funding from the central government transfers. The property tax accounts for about 35% of the local government own source revenues, with the remaining funds coming from an assortment of licenses, fees and charges. There appears to be large variations across the local governments, with the capital city generating close to 70 percent of total property tax revenues in the country. In urban arcas there is a special tax on vacant land, levied at 5%. The property tax is levied on land only, restricted to those areas designated by the Minister of Local Govermment as being taxable. The tax rate is determined by the central government in law, applied aniformly for all properties at 0.1% of the estimated capital value of property (not the rental value). Property valuations are carried out by the Central Government Valuation Office (GVO). According to the Monzanis Property Valuation Association, there are only 25 registered valuation surveyors in the country of which only 4 are employed by the GVO. The law states that property valuations for property tax purposes must be undertaken every 8 years based on the capital value, not the rental value. In practice, however, most valuation rotls are older than 12 years. Furthermore, these valuation rolls largely cover only the surveyed areas in the capital city and larger towns. The law stipulates that every taxable property must be physically inspected by the registered valuation surveyor to ensure accuracy of the property information. Exemptions are granted to government properties, government-owned enterpnises (such as the National Railway Corporation, National Strategic Metals Corporation and the National Electricity Agency), as well as to religious, sports clubs, labor unions, and charitable and educational institutions. Private (profit making schools) are given a 50% tax rebate. Foreign diplomatic properties, including residences, are tax exempt. Agricultural land is exempt to protect small farmers and all owner-occupied residential land is tax exempt. Under the Agriculture Promotion Act, land used for large-seale agrieulrural-processing industries are given a valuation deduction of 25%. To booss tourism, The Tourism Act of 2015 provides a 10-year exemption for property used by the tourism industry. Land which has structures "under construction" receive a 50% rebate, but will be fully taxed once the buildings are fully complete. Furthermore, the Minister responsible for Local Government has discretion to grant additional exemptions in "special circumstances". While the GVO is responsible for valuing the properties, local govemments are responsible for all other property tax administration functions, including maintaining the property tax roll, tax liability assessment, billing. collection and enforcement and taxpayer service. The property tax valuation appeal system is the respossibility of the GVO. The majority of local governments are in serious financial trouble doe to significint under-performance. The average property tax revenue collection ratio is only 30 percent. The local govemments are allowed to churge 13, per month for late property tax payments up to a period of 2 years. The prime interest rate is 24% per year. Tax payment arrears amount to the equivalent of mote than a 18 months of tax revenuc, and are aged from 180 days to 10 years. In many instanees members of parliament, elocted councilors and promineat businesses are among the defaulters. A few councils have tried to publish the names of delinquent taxpayers in local newrpapers and on public notice boards, whereas others try to utilize civil courts. However, the court processes seem to be lengthy, cumbersome and expensive. Tax liens as well as the seirure of immovable and movable property seizure and public auctions are allowed. However, these mechanisms are seldom, if ever used. Several laws firms are proposing to assist in the collection function for 20% collector's fee, In the past the Association of Local Governments had suggessied to transfer all arrears to the CG Taxation Department to have them assist on collecting the outstanding arrears but this has not yet been agreed by the Rural taxpayers in especially the larger districts complain that local government offices are not accessible to them and that service delivery is lacking, thus see no reason for them to pay property taxes. In the urban areas the complaints are usually that taxpayers have to wait hours to pay only to be confronted by rude officials. Many taxpayers postpone payment until they either need to transfer their properties and/or to receive a local government service. There also seems to be a lack of understanding of the responsibilities and rights of taxpayers under the property tax system. The local newspaper has exposed cases of corruption, some involving fake receipts, as well as mismanagement of the local government budget leading to a lack of credibility in the transparency and accountability of the local government system. Parliament is holding a public hearing to gather information to be used in this reform process. You have been asked to write an individual response (maximum 4 pages) addressing the following issues, and to be ready to discuss the following issues: (1) What are the major problems facing the Mapzapia property tax system. (2) What policy changes would you recommend regarding the tax base and tax rates? (3) What administrative reforms would you recommend to improve the coverage ratio, the valuation ratio and the collection ratios? Outline your recommended property tax reform strategy in Moxzania (e\& what are the key intervention priorities?)