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Urban services in Lusaka and other cities appear deficient in many respects, justifying the need
for additional revenue. Yet, when the values of improvements are raised to adjust for inflation,
Zambian taxpayers seem to expect the tax rate to drop, maintaining a constant tax bill in real terms.
When a city tries to update the values without a significant drop in the rate, and without negotiations
with ratepayers to win acceptance, the result is likely to produce a taxpayer revolt, as happened in
Lusaka in 1993. The municipal councils and the public do not appear to understand the rate-setting
process.
In practice, urban rates in Zambia fall far short of their revenue potential. First, notices are
not always delivered to taxpayers, and second, there are no real penalties for late payment. The one
effective collection method does not even involve the municipality; i.e., the registrar requires that
persons seeking to record a property transfer bring in clearances, or certificates of payment of both
rates and ground rents. As a rule, they do not, but the tax is so low that the entire arrears can be paid
from pocket change. Actual revenues in any given year thus depend much more on the level of real
estate transfer activity than on the total values of rateable improvements or the rate of the levy.
Revenues have reportedly risen somewhat in the last two years following computerization of rates due.
The MOL (ground rents) and some council offices (rates) are now able to determine instantly how
much is owed by someone seeking a tax clearance.
In contrast with Zambian laxness, the United States and a few other countries have an
enforcement mechanism for tax collection that is simple and extremely effective. Any property for
which the tax is not paid during two years is auctioned off to the highest bidder. The successful bidder
is delivered a new property title, and the occupant is evicted. In practice, almost all delinquent
taxpayers manage to pay up the back taxes plus interest owed within a day or two before the property
is to be auctioned.
As far as could be determined, there are no penalties for late payment in Zambia, no indexing
for inflation, or interest on arrears. With inflation in 1993 of approximately 100 percent, any rational
taxpayer would postpone payment. The law effecting penalties on tardy payments appears drastic
enough. The council may obtain a court order for distraint, which entitles it to seize a building and
remove enough furniture or other contents to cover back taxes. It may also auction the building, and
if the winning bid exceeds taxes due, the law requires that the difference be paid to the now-former
owner. In practice, all interviewees stated that they had never heard of such enforcement ever being
practiced on delinquent ratepayers in Zambia.
D. Rate valuations
Between valuations (legally every five years), there is no indexing or other adjustments for
inflation or general growth in market values. If inflation raises expenditures, the rateable values
remain the same, but the arithmetic causes the tax rate itself to rise. When the next valuation is
performed, the tax rate logically falls. The law contemplates supplementary valuation rolls whenever
new construction occurs, or for any properties inadvertently left out of the five-year valuation. The
opinions of interviewees differed as to whether this was done systematically throughout the country.
The Government Valuation Department (GVD) is now able to do it for the rural councils, and does
so when requested. The values of new or omitted buildings are set with tables representing kwacha
values per square meter of each type of construction used at the last general valuation. This seeks to
ensure horizontal equity, with like improvements being taxed alike. However, in practice,