The authors would like to thank the officials of the DGID and the Treasury of Senegal, met during field research, for the valuable information provided and their contributions to the reflections presented in this blog.
The sharing of property and taxpayer data between key stakeholders is crucial for ensuring the efficiency of a property tax administration. A fluid system for sharing information between the various actors involved in the tax chain helps maintain an up-to-date database and ensures optimal tracking of payments.
However, many low-income countries face significant challenges in implementing such systems due to various constraints, including a lack of resources, inadequate infrastructure, as well as limited institutional capacity. Senegal is no exception to this reality. Property tax is administered jointly by two entities; an institutional setup that presents challenges in terms of information sharing and has significant implications for the administration and mobilization of this tax.
The Directorate General of Taxes and Domains (DGID) and the Directorate General of Public Accounting and Treasury (Treasury) are the main agencies responsible for property tax administration. The DGID is responsible for defining the tax base by identifying properties and taxpayers, conducting property assessments, and issuing tax notices. The Treasury, is responsible for the distribution of these notices, the collection of payments and enforcement.
Challenges related to the institutional arrangement and information sharing practices
The DGID uses an Information Technology (IT) system for the management of local taxes (SIGUIL) which allows for the management of taxpayer data for property taxation. In parallel, the Treasury uses a financial management system called GFILOC which records, among other things, taxpayer payments and ensures tracking, facilitating enforcement. The sharing of responsibilities between these two agencies creates an interdependence regarding access to taxpayer data, updates and tracking. However, despite the digitization of data collection in each system, there is currently no interface enabling the link between SIGUIL and GFILOC. Thus, information sharing is done manually and unidirectionally – that is, from the DGID to the Treasury.
Specifically, the DGID prints the tax notices, which are then manually transmitted to the Treasury in the form of paper bundles. Treasury officials then verify the accuracy of the information on each notice before distributing them and recording the payments in GFILOC.
This process of sharing responsibilities in the presence of two different and unconnected IT systems leads to three major challenges and consequences.
The first challenge lies in property and taxpayer identification during the distribution of tax notices. The Treasury’s ability to effectively distribute these notices depends on the quality of the information that identifies and locates taxpayers. Each year, Treasury agents encounter difficulties in distributing all the tax notices, primarily due to their inability to identify parcels and taxpayers from the information on the notices. These identification problems can arise from several factors, including:
- Incomplete or outdated taxpayer addresses in the DGID’s databases, which do not correspond to the real address of the property.
- Inability to identify the owner due to a lack of updates in the databases in the event of a property transfers or inheritance.
Tax notices that are not distributed due to these issues are referred to as “undistributed notices” because they fail to be delivered to taxpayers and generate the expected revenue.
The second challenge relates to the absence of feedback mechanisms that allow Treasury officers to communicate information on erroneous notices to the DGID in a timely and effective manner. After the distribution of the notices, Treasury officials compile the undistributed notices to share them, at the end of each year, with the mayor of the concerned municipality and the DGID. The DGID is expected to update its databases as frequently as possible based on this information. However, information is currently shared manually, by physically sending these notices to the offices of the DGID. This approach generates “bureaucratic red tape” for DGID agents, who rarely have time to process the erroneous notices. As a result, due to the lack of processing of erroneous information in the databases, the DGID often continues to issue the same tax notices containing incorrect information every year, which increases the number of undistributed notices, thus complicating the Treasury’s task.
Thirdly, the recurrence and increasing number of undistributed notices leads to a significant loss of revenue for the municipalities. Anecdotally, it is reported that the sum of the tax notices classified as undistributed revenues in the city of Dakar would be equivalent to 2 billion FCFA (≈ 3.341 million USD) of lost revenue. Significant revenue losses due to these undistributed notices are also noted in other municipalities, including Thiès and Saint-Louis.
Recent efforts to improve information sharing
In response to the challenges faced by the property tax administration, the Senegalese government has initiated reforms, including in information technology, to improve the information sharing system between the DGID and the Treasury.
At the initiative of a technical advisor from the Minister of Finance and Budget and with the goal of creating a common environment for the two administrations, a new IT platform called SIGUIL 2 has been developed. It is designed to simultaneously integrate the functions of the two administrations, thus allowing for better management of property tax information. This application is deployed in particular as part of property censuses in progress.
Although it is too early to assess the effectiveness of SIGUIL 2, its access by both administrations has the potential to facilitate regular updates of the databases, potentially reducing the number of undistributed notices and generally ensuring better information sharing between the two administrations.
Lessons learned
Senegal’s experience highlights several important lessons in taxpayer data sharing, IT system adoption, and property tax administration efficiency.
- A fit-for-purpose IT system not only helps to maintain an up-to-date database, but also facilitates the sharing of information between the actors involved in the tax chain.
- However, the implementation of information-sharing systems sometimes faces challenges in terms of resources, adequate infrastructure and limited institutional capacity.
- Moreover, the challenges related to the institutional arrangement, in particular the use of two different IT systems without a linking interface, lead to problems in identifying properties and taxpayers, inefficient feedback and significant revenue losses for municipalities.
- It is therefore essential to ensure strong cooperation between different departments and levels of government to optimize the effectiveness of IT tools. Lack of coordination can lead to the adoption of non-interoperable information systems, thus affecting the ability of new information technologies to improve property tax administration.
Photo credit to: Vincent Tremeau / World Bank