In most Francophone West African countries, property tax systems are administered by central governments. This arrangement requires significant coordination between central tax authorities and local governments. However, in practice, this level of coordination tends to fall short for a variety of reasons. First, due to a lack of clear regulatory frameworks and institutionalized collaboration mechanisms, the two levels of government may not interact on a regular basis to coordinate their roles. When these mechanisms are absent, it is common to find central-local government relations strained by high levels of mistrust and conflict.
Misaligned incentives can also complicate collaboration. From the perspective of central tax authorities, the costs of collaboration are often greater than the expected benefits of greater tax revenue, which accrue to local governments. Therefore, central authorities may lack the political will to contribute the necessary information and resources to raise local taxes.
Thirdly, in theory, local governments can play an important role in strengthening property tax systems. Their proximity to the tax base makes them well placed to identify properties, update property registers, and conduct taxpayer sensitization. Despite these potential contributions, local government officials are often only marginally involved in the tax administration process. As a result, local governments are heavily dependent on central authorities, with little bargaining power to compel central agencies to cooperate.
A policy brief based on a diagnostic assessment of Benin’s property tax system offers insights into how institutional arrangements can help mitigate these challenges. The case of Benin illustrates how mechanisms that promote collaboration, align incentives, and remedy power imbalances between levels of government can improve property tax mobilization under a centralized system. This blog aims to present these findings in a way that may be relevant for other countries pursuing property tax reforms.
Institutionalizing Collaboration Mechanisms
In Benin, a key mechanism that strengthens collaboration is bilateral partnership agreements, signed annually by municipalities and the national revenue authority (Direction Générale des Impôts, DGI). These agreements are institutionalized in the legal framework and require the two parties to jointly set performance targets for local taxes and clarify their respective responsibilities. This also creates a basis for accountability since expectations are established from the onset, clarifying each party’s roles, not set in law. Negotiating and assessing the partnership agreements also provides an opportunity for both parties to communicate regularly and monitor revenue mobilization.
The institutional set-up within the DGI also has interesting collaborative arrangements between its deconcentrated offices. The Directions Départementales des Impôts (DDIs), which are regional offices of the DGI, serve as a “transmission belt” between the DGI headquarters and local tax centers known as Centres des Impôts des Petites Entreprises (CIPEs). DDIs hold a considerable degree of autonomy compared to governing bodies in other similarly centralized tax systems, allowing for more effective processes. DDIs coordinate activities across levels of government by allocating resources, setting performance objectives, and establishing work plans for the CIPEs. CIPEs report directly to the DDIs, so the latter can supervise their activities and hold CIPEs accountable.
Aligning Incentives and Securing Buy-In from Both Levels of Government
National policy priorities also shape incentives for collaboration in Benin’s property tax system. For example, domestic resource mobilization (DRM) has become a key objective of national fiscal policy, reflected in the national government’s Medium-Term Revenue Mobilization Strategy, which links increased revenue collection to its ability to finance development initiatives. In addition, local tax revenues are now included in the calculation of the country’s fiscal pressure rate, adding an incentive for actors at the central level to allocate sufficient efforts toward local revenue mobilization. Consequently, strengthening local tax collection contributes to broader national revenue goals.
Moreover, as part of the bilateral partnership agreements signed between municipalities and CIPEs, 10% of property tax revenues are earmarked to cover administrative costs borne by the local tax offices, the national revenue authority, and other institutions involved. Although this figure does not fully cover operational costs in municipalities outside the capital, Cotonou, this cost-sharing arrangement certainly helps offset the financial burden of the national tax administration.
Maintaining a Balance of Power between Local and Central Governments
In some municipalities, local governments control an important asset: the urban land register, known as the Registre Foncier Urbain (RFU). The RFU is a digitalized map that records individual plots and their owners and assigns to each a locally generated identification code. While not all local governments own an urban land register, those that do rely on it as a central point of reference to help identify taxable properties. In municipalities with an RFU, RFU officers are often physically present within CIPE units to help tax agents during property tax operations. These direct and frequent interactions help further trust-based interpersonal relationships between actors at different levels of government.
Importantly, municipal control over property identification data gives local governments more bargaining power when interacting with their central government colleagues. This data is necessary to identify and update properties within the tax system, rendering municipal cooperation a crucial part of the tax administration process. Some municipalities with the financial capacity also help cover operational costs, recruit and train agents, and provide logistical support. Together, these contributions from municipalities transform intergovernmental collaboration into an “exchange-based relationship,” wherein each side has something important to contribute to ensure the tax administration process is effective.
Conclusion: Lessons and Considerations
Benin’s experience offers useful insights for countries seeking to strengthen property tax within centralized systems. Firstly, formal collaboration mechanisms institutionalized in the legal and regulatory framework can help clarify roles, smooth coordination efforts, and ensure accountability across actors. Second, aligning incentives to secure buy-in from both levels of government can encourage systemic cooperation. Finally, when local authorities hold key information critical for tax administration, collaboration can take the form of a more balanced exchange between the two levels of government.
Until recently, Benin has had a relatively well-performing system able to mediate the unequal balance of power between central and local government actors. However, reforms now seek to transfer data ownership over the urban land register (RFU) away from municipalities, and to the national revenue authority. While centralization is not inherently incompatible with effective collaboration, especially in a relatively small country such as Benin, these reforms raise important questions about municipalities’ remaining role and bargaining power during tax operations.
If authority over property identification becomes more concentrated at the center, maintaining transparent information-sharing arrangements with municipalities will be integral to ensuring that trust remains a pillar of the relationship between local and central government actors. It will also be important to empower local governments to continue contributing in areas where their proximity to residents and knowledge of the local tax base can make a difference, especially for taxpayer sensitization and keeping property registers up to date.
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