Journal of Property Tax Assessment & Administration


Municipalities in Bangladesh are always facing a shortage of funds. The process of financing urban local governments is always being reformed; nevertheless, a large share of their revenue is generated by taxation (Taleb 2004). And though the structure of local tax systems varies greatly from country to country, local government generally relies on property taxes (Bird and Slack 2004). In most developing and transition countries, the property tax is often poorly administered (Bahl and Martinez-Vazquez 2008). As a result, the tax is generally very unpopular because the tax base is often determined in ways that are not transparent to or understandable by the general public, thereby undermining the legitimacy and fairness of the tax (Bahl and Martinez-Vazquez 2008). Property taxes also are unpopular because of the “inherent arbitrariness in the process of assigning values to individual properties” (Bird 2006). Property taxes, one of the main sources of internal revenue of the urban local bodies of Bangladesh, were imposed under the Pourashava Ordinance of 1977 (Ahmed 1986). Because the property tax is based on the annual valuation of lands and buildings, the entire process of determining the property tax is dependent solely on assessment of lands and buildings in Bangladesh. At present, the annual rental value (ARV) method is used for assessing property tax in Bangladesh. Under this system, the collection rate is about 55 percent. There are complaints about the assessment/ reassessment of the existing tax base (World Bank 1997). Also, the potential of this source is seriously undermined by the weaknesses in both the assessment and collection processes (Taleb 2004). An often-cited reason for poor collection is that the existing system lacked transparency and objectivity. (Ahmedabad Municipal Corporation 2003). Because of the subjectivity and corruption in the existing assessment system, international financial agencies (e.g., the World Bank and the Asian Development Bank and such other organizations) are now showing less interest in investing in Bangladesh municipalities (LGED 1999).

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Assessment administration