Taxing Immovable Property: Revenue Potential and Implementation Challenges

Summary

This 2013 IMF working paper by John Norregaard is a standard reference on recurrent taxes on immovable property. It surveys their use across countries and assesses why a tax economists widely favour remains under-used.

Key Points

• Efficient but under-used. Recurrent property/land taxes are among the least distortionary revenue sources, yet they raise only a small share of revenue in most countries (and far less in developing economies).
• The obstacles are administrative and political, not economic: the need for valuation/assessment capacity, the tax's high visibility (it is salient and hard to hide, making it politically unpopular), and weak cadastral systems.
• Large untapped potential, especially in developing countries, if valuation and administration are strengthened.

Bears On

• Objection: LVT can't be assessed accurately
• Place: Denmark

Sources

1. John Norregaard (2013), "Taxing Immovable Property: Revenue Potential and Implementation Challenges," IMF Working Paper 13/129. PDF