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Cameroon abandons inclusion of land tax in electricity bills, waiving potential XAF5mln revenue gain

Cameroon abandons inclusion of land tax in electricity bills, waiving potential XAF5mln revenue gain
  • Comments   -   Tuesday, 14 May 2019 17:04

(Business in Cameroon) - Initially set to be launched in 2018, then in 2019, the plan to include property tax by one twelfth in electricity bills is now revoked. Reliable sources said this project that would have been implemented with the support of power utility Eneo has finally not been approved.

The tax administration will simply, based on Eneo's customer base, distribute the pre-filled property tax returns to the populations who will now have to go to the tax authorities to pay the tax.

Pre-filled returns could be distributed by Eneo’s subcontractors, who generally distribute bills to households under an agreement signed with these partners.

The Tax Directorate found that if the property tax was included in electricity bills, treasury could collect as of the first year of implementation of the reform, the double of the XAF5 billion currently collected each year under this tax. In the long run, the tax authority planned to mobilize up to XAF100 billion each year, once this reform on property tax collection is fully operational.

By revoking the reform, Cameroon is depriving itself of resources that could have made it possible to finance decentralization. As property tax is a local tax, this increase in revenue would therefore have first benefited decentralized local authorities.

The reform already received IMF’s green light as part of its ongoing economic and financial program with Cameroon. It was seen as an opportunity to increase non-oil revenues and ensure transparency on real estate ownership in the country.

“The tax collection reform proposed by the Tax Directorate should be encouraged [...]Beyond the considerable revenue, the proposal also presents useful opportunities in terms of the reorganization of the units that should, in time, make it possible to better tax individuals and their property income […] Furthermore, a wealth-based approach, and the comparison of standards of living with income levels that it allows, are useful for detecting income hidden abroad,” the international financial institution said in a July 2017 report. 

The main tax inspector, Alain Symphorien Ndzana Biloa, who rejected the reform says it could lead to social tension with regard to the high disputes its implementation could generate. 70 to 80% of Eneo's subscribers are renters and therefore do not pay property tax. The expert suggests that the tax authority makes use of Eneo's database to locate taxpayers subject to this tax.

Brice R. Mbodiam

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