Beneficial Property Taxation for Emerging Market Countries : Addressing Climate Change and Post-Pandemic Recovery

This book presents a new approach to recurrent property taxation based on occupancy, size, and location, that will strengthen local governments. Reflecting on the concept of "beneficial property taxation" first proposed by Alfred Marshall, the political economy constraints faced by traditional property taxation are examined and compared with evidence for beneficial property tax seen in China, Mexico, and sub-Saharan Africa. The benefits of this form of taxation are highlighted in relation to the financing of local public services and infrastructure that are required for sustainable development. This book provides a policy-oriented look at property taxation that engages with the sustainable development goals and lay the foundations for a post-pandemic recovery. It will be relevant to researchers and policymakers interested in development economics and the governance of taxation. Ehtisham Ahmad has been Visiting Professor at the LSE Grantham Research Institute, Pao Yu-Kong Professor at Zhejiang University and has held senior positions at the IMF. Giorgio Brosio is Emeritus Professor of Economics at the University of Torino Preface Contents List of Figures List of Tables Introduction: Growing Importance of Beneficial Property Taxation in a Post-pandemic World The Case for Property Taxes, the “Wicksellian Connection,” and Alfred Marshall’s Beneficial Property Taxes Land Value Capture Area-Based Taxation Making a Beneficial Recurrent Property Tax Work Administering a Property Tax Structure of the Volume Chapter 1: Property Taxation, Instruments, Models, Administration, and Potential Effects 1 Typology of Property Taxation 1.1 Recurrent Property Taxation 1.2 Non-recurrent Taxation 2 Defining the Recurrent Property Tax Base—Value or Area/Location 2.1 Value-Based Taxes Tracking Ownership and Values Cadasters or Registers with Complex Ownership Patterns Difficulties of Recurrent Property Taxation: Valuation 2.2 Area-Based Approaches Area Only Area and Location 2.3 Comparing the Models Economic Efficiency Administration Costs Growth of Revenue Transparency/Obfuscation Equity 3 Dismal Revenue Collections from the Property Tax in Emerging Market Countries 4 Rate Setting, Local Accountability, and Other Advantages 5 Ability to Pay and Benefit Approaches and Assignment of Property Taxation 6 International Experiences: Resilience of Area-Based Taxes and Shifting to Simpler Beneficial Property Tax Options 6.1 The Evolution of the English Model Toward Beneficial Property Taxes 7 Other International Experiences of Property Taxes and Political Resilience of Area-Based Systems 7.1 Israel 7.2 Bengaluru (India) 7.3 The Czech Republic 7.4 Colombia 7.5 Turkey 7.6 Gabon References Chapter 2: Failure and Promise of Property Taxation in Senegal 1 Informality, Sustainable Growth Hubs, and Property Taxes 2 Property Tax Collections and Potential 3 The Case of Saint Louis 4 The Sustainable Growth Agenda References Chapter 3: Challenges of Property Taxation in Tanzania 1 Property Taxation in Tanzania: General Features 1.1 Land Tenure Regime 1.2 Property Tax 1.3 Land Rent Fees 1.4 Own-Taxes and Intergovernmental Transfers 2 City of Ilala 3 Experiments in Mwanza 4 Conclusions References Chapter 4: Financing Sustainable Local Spending and Infrastructure in China 1 Chinese Practices for Taxing Property 1.1 The Land Sales/Value Capture Model 1.2 Taxation of Property Sales and Business Properties 1.3 Alternate Options for Recurrent Taxation of Properties and Local Own-Source Revenues 2 Simulating a Beneficial Property Tax for China 2.1 The Data 2.2 What Does the Data Tell Us About the Six Cities? 2.3 The Political Economy Constraints 2.4 The Simulations 3 Implementing a Beneficial Property Tax in Guangzhou 4 The Next Steps in Property Tax Reforms in China References Chapter 5: Mexico: Failure of the Traditional Property Tax and Proposed Beneficial Property Tax Alternative 1 Overview of the Property Tax 2 Problems 3 Causes of These Problems 3.1 Incentives 3.2 Past Efforts and Their Shortcomings 4 Options for Reform 4.1 Reduce Reliance of Municipalities on Bailouts 4.2 De-politicize Collection: Administration and Auditing by SAT or Independent Agency 4.3 Allow Municipalities to Set the Rate Without Approval of the State Legislature 4.4 Economic Incentives Through Improved Transfer Formulas 5 Toward a Beneficial Property Tax in Mexico 6 Some Lessons from the Sub-national Tax Reform Agenda 6.1 The Role of Fiscal Equalization in the Sustainable Employment Generation Agenda References Chapter 6: Administration of Property Taxes 1 Limits of Colonial “Tax Collector” Administration 2 Viable Approaches for Emerging and Developing Countries 2.1 Self-Assessment Together with a Modern Tax Administration 3 Tax Administration Options for Arms’ Length Operation of Local Taxes 3.1 Registration 3.2 Valuation 3.3 Collection 3.4 Enforcement 3.5 Bill Delivery and Taxpayer Services 4 New Technology: Blockchain Options 4.1 What Is Blockchain? 4.2 Digital Tools of Blockchain 4.3 Building a Blockchain Blocks Nodes 4.4 Applying a Blockchain 4.5 Features and Strengths of Blockchain 5 Types of Blockchain 6 Blockchain and Land Surveying, Registration, and Taxation References Chapter 7: Toward a Beneficial Property Tax Agenda for Sustainable Growth References Annex Table 1 Detailed structure of property taxation in selected countries References Index