6 Replies Latest reply: Aug 29, 2016 5:00 PM by 1443719 RSS

    Reforming Property Taxes

    1443719 C4D Explorer

       

      Dear community members,

       

      I would like to open a space to discuss and write about the property tax. It have been studied for years by economists and practitioners and the literature about its merits and drawbacks is ample. Even though, it is not entirely perfect, economist tend to favor increased dependence on property taxes due to their attractive economic properties as a source of own revenue for local governments. However, when one look at the numbers it could be found that the share of the property tax in industrialized countries is, on average, 2% of GDP while in developing and transition countries it represents just 0,6% of GDP. Regardless of its weak revenue performance, especially in developing countries, the optimism about its potential remain among government officials and analysts, who are still looking for the breakthrough reform that will make it more revenue productive.

       

      Having said this, I want to quote what once Benjamin Franklin said: “In this world nothing can be said to be certain, except death and taxes” and perhaps replace the last word (“Taxes”) by tax reforms”. With the above in mind, let me share a compilation of some of the guidelines that have been published by different authors, about the steps one should follow in order to implement a property tax reform.

       

       

       

       

        • Re: Reforming Property Taxes
          545477 C4D Extraordinaire

          Dear Juan Felipe Serrano Ariza, excellent initiative to open a space on property taxes. The file you shared offers a very useful glance at some key resources on the subject. I'm sure other community members can add to that list. Here come two slides from an insightful presentation delivered recently by a World Bank economist, Rajul Awasthi, offering a similar overview of literature and best practice principles. The full presentation is attached further below.

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          • Re: Reforming Property Taxes
            1443719 C4D Explorer

            In developing countries, the property tax can be a mechanism with immense potential to improve revenue and equity. However, in order to attain this potential, countries have to take actions in aspects such as strategic reforms, combining policy and administrative interactions to improve tax base coverage, property valuation, collection, enforcement and tax payer services. In the Design of a property tax reform, countries should be aware about their limitations, where the most common in the developing world is the weak administration, frequently caused by political, institutional and capacity constraints. Property tax reforms require time to realize sustainable results associated to improvements in revenue, equity and efficiency.

             

            The above are just some of the ideas presented in the chapter 10 of the book "Taxation and Development: The weakest Link?" in which Roy Kelly develops the idea on how to implement sustainable property tax reforms in developing countries. The full chapter is attached below.

             

             

            • Re: Reforming Property Taxes
              1443719 C4D Explorer

              Despite many years of recommendations from international agencies to make more use of the property tax, reforming it has proven to be difficult in developing and developed countries alike. Recent experiences with property tax reforms have been accumulated by different countries around the world, both successful and not so successful. Even though each case presents its own particularities, in this paper Enid Slack and Richard Bird discuss some common reasons for the apparent sharp disconnect between the economics and the politics of property tax reforms, and the lessons to be learned from experiences elsewhere with attempts to deal with the problems that often block successful reforms. Find below the paper published by the Institute of Municipal Finance and Governance (IMFG).

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              • Re: Reforming Property Taxes
                khalifeh C4D Expert

                It is important to study such significant issue which is of great impact on self revenues of municipalities. Governments should take serious actions and procedures to make use of property tax for the sake of municipalities. Laws should be amended in order to meet the requirements.

                • Re: Reforming Property Taxes
                  545477 C4D Extraordinaire

                  Attaching here a draft proposal currently under consideration by the World Bank and by the Lincoln Institute of Land Planning for the development of an Operational Guidebook on Property Tax Reform. The proposed activity will provide a key resource to assist city governments develop property tax systems to enhance revenue yields and improve creditworthiness. The activity will perform a systematic review of different property tax approaches and development models and provide guidance for developing country-appropriate models across the core dimensions of property taxation, i.e.: a) definition of the tax object or base; b) basis of valuation; c) method of valuation (discreet/banded/etc); d) setting the tax rate (tax credits, etc); e) administration, billing, collection; f) enforcement (courts); g) appeals.

                   

                  This is only a preliminary proposal, shared here for information and in case there are comments from community members that can be incorporated into its final version. In case the activity is approved, we'll post here all related information and results.

                  • Re: Reforming Property Taxes
                    1443719 C4D Explorer

                    Is good to see that there are different initiatives encouraging the use of more meaningful property tax systems. The International Center for Tax and Development (ICTD) will be launching the African Property Tax Initiative (APTI) in the latter part of 2016. This initiative will seek to become a strong, well-resourced network of property tax practitioners, policy makers and researchers, available to provide support to other practitioners where possible. Find attached the Draft Terms of Reference for a Project Leader in which you will find a short explanation about the African Property Tax Initiative (APTI).