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The Assignment of the Property Tax: Should Developing Countries Follow the Conventional Wisdom?

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Abstract

The goal of this paper is to revisit the issue of the appropriate assignment of the property tax within the context of a fiscally decentralized system. We examine whether the conventional wisdom of assigning property taxes to local governments is the right one. Particularly in light of the difficulties many developing countries have with properly administering the property tax and the apparent reluctance of local authorities to utilize the revenue potential of the property tax. Because the assignment of the property tax involves a number of functions, such as defining the tax base, setting the tax rate, as well as many administrative functions, like registration, assessment, and collections, we also examine the wisdom of assigning all of these functions to local governments versus assigning some of these functions to local governments and the remaining functions to higher level governments. In the latter case, the important issue is which functions are properly assigned to local governments.

Suggested Citation

  • Jorge Martinez-Vazquez & Mark Rider, 2008. "The Assignment of the Property Tax: Should Developing Countries Follow the Conventional Wisdom?," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0821, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    • Handle: RePEc:ays:ispwps:paper0821
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    File URL: http://icepp.gsu.edu/files/2015/03/ispwp0821.pdf
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    References listed on IDEAS

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    1. Ana María Iregui B. & Ligia Melo B. & Jorge Ramos F., 2004. "El impuesto predial en Colombia:evolución reciente, comportamiento de las tarifas y potencial de recuado," Revista ESPE - Ensayos sobre Política Económica, Banco de la Republica de Colombia, vol. 22(46-2), pages 258-304, Diciembre.
    2. Bentick, Brian L, 1979. "The Impact of Taxation and Valuation Practices on the Timing and Efficiency of Land Use," Journal of Political Economy, University of Chicago Press, vol. 87(4), pages 859-868, August.
    3. Bergstrom, Theodore C & Goodman, Robert P, 1973. "Private Demands for Public Goods," American Economic Review, American Economic Association, vol. 63(3), pages 280-296, June.
    4. Charles E. McLure, Jr. & Jorge Martinez-Vazquez, 1998. "Intergovernmental Fiscal Relations in Vietnam," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper9802, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    5. Richard Miller Bird, 1999. "Rethinking Subnational Taxes; A New Look At Tax Assignment," IMF Working Papers 99/165, International Monetary Fund.
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    Cited by:

    1. Cristian Sepulveda & Jorge Martinez-Vazquez, 2012. "Explaining property tax collections in developing countries: the case of Latin America," Chapters,in: Decentralization and Reform in Latin America, chapter 7, pages iii-iii Edward Elgar Publishing.
    2. John Norregaard, 2013. "Taxing Immovable Property Revenue Potential and Implementation Challenges," IMF Working Papers 13/129, International Monetary Fund.
    3. Daniel Artana & Sebastián Auguste & Marcela Cristini & Cynthia Moskovits & Ivana Templado, 2012. "Sub-National Revenue Mobilization in Latin American and Caribbean Countries: The Case of Argentina," IDB Publications (Working Papers) 3887, Inter-American Development Bank.

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