AN EVALUATION OF THE APPLICATION OF COMPUTER ASSISTED MASS APPRAISAL IN THE MTWARA-MIKINDANI MUNICIPALITY RATING VALUATION PROJECT

Abstract

Property tax is an invaluable source of revenue that is harnessed to finance municipal services in urban areas all over the world.  In most tax jurisdictions, property tax is a levy that is based on the market value of the property, hence often there is a need to carry out regular valuations with a view to updating the tax base of a rateable area. In Tanzania, rating valuation has traditionally been carried out using the single parcel valuation approach. This approach, unfortunately, is often beset with a number of problems: it is costly, labour intensive, time consuming, tedious, opaque and can potentially induce valuation inconsistencies.

 

As of now, in most tax jurisdictions in the world, the trend has been to move away from the traditional single parcel based valuation approach and gravitate towards the adoption of Computer Assisted Mass Appraisal (CAMA) that is integrated with Geographic Information Systems (GIS) capabilities to achieve better results. The latter approach is credited for being a more efficient property valuation approach compared to the traditional single parcel based valuation model. GIS-CAMA is credited for being less costly to implement especially in the long-run; requires less professional manpower as the valuation function can be separated from the data capture function; it is less time consuming, more transparent and leads to greater consistency in values – which is critical in ad-valorem tax systems.

 

In cognisance of the GIS-CAMA potential, GIS-CAMA was applied for the first time in Tanzania in a pilot rating valuation project in the Mtwara-Mikindani Municipality in the year 2012 whereby 12,000 rateable properties were valued.  This paper examines the robustness of the Mtwara-Mikindani rating valuation project with a view to determining whether or not it is worth being replicated in other urban areas in the country.

 

It is found that the Mtwara-Mikindani rating valuation project has, in general, been successful particularly in terms of dealing with most of the typical problems that are associated with the single parcel valuation approach. Nonetheless, the adoption of CAMA in the municipality has not been without problems.  Amongst the main criticisms of the application of CAMA in Mtwara-Mikindani, is the adoption of a quasi-sophisticated valuation model that can potentially lead to incorrect and inconsistent valuations; the level of subjectivity that is ingrained in the model making the CAMA model a near replication of the single parcel valuation approach, lack of a clear legal backing for the adoption and application of CAMA in Tanzania and the pervasiveness of thin property markets in the municipality.

 

Despite the observed drawbacks of the pilot CAMA project in the country, there are early indications that CAMA holds promise in relation to improving the efficacy of rating valuations in the country.  This is particularly so if the early teething problems of CAMA application that are outlined in this paper are addressed.