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The Property Tax—in Theory and Practice

Author

Listed:
  • Enid Slack

    (Institute on Municipal Finance and Governance, University of Toronto)

Abstract

The property tax is considered to be a good tax for local governments, mainly because of the connection between the types of services funded at the local level and the benefit to property values. Yet, property tax revenues rarely account for more than 3 percent of Gross Domestic Product (GDP) in any country. This paper explains why the property tax is under-used by highlighting some of the problems with the tax, such as its unpopularity, its inelasticity, erosion of tax base, and poor administration. Reforming the property tax is difficult, however, because no matter how economically desirable the long-run outcome of reform may be, its transitional effects may be highly undesirable in political terms—there will inevitably be winners and losers. Even if the property tax is used more heavily, it will never be able to do the whole job, especially for local governments that are delivering more than property-related services.

Suggested Citation

  • Enid Slack, 2011. "The Property Tax—in Theory and Practice," IMFG Papers 02, University of Toronto, Institute on Municipal Finance and Governance.
  • Handle: RePEc:mfg:wpaper:02
    as

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    File URL: https://tspace.library.utoronto.ca/bitstream/1807/81273/1/imfg_paper_2_slack_2011-11-26.pdf
    File Function: First version, 2011
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    More about this item

    Keywords

    property tax; tax reform; international comparisons;
    All these keywords.

    JEL classification:

    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue

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