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Reforming the Tax on Immovable Property: Taking Care of the Unloved


  • Hansjörg Blöchliger



The tax on immovable property recently started to regain its former significance, but the tax yield still remains low, with slightly more than 1% of GDP and wide variation across countries. Against this background this paper surveys property tax policy in OECD countries and analyses the efficiency, distributional and stabilisation properties of property tax. Despite rising house prices, property tax revenues are modest, because tax values of property are set below market values; and because myriads of tax exemptions reduce the tax base and tax revenues further. While property taxes are considered the least harmful to growth, a pure land tax is preferable to a tax on investment. Property taxes can be anything from progressive to regressive, depending on tax incidence and the distribution of immovable property across income groups. Property taxes tend to stabilise house prices, although the effect is rather small. Finally, property taxes can underpin sustainable land use. Political economy factors largely explain resistance against property tax reform, which, among others, might include measures for poor and cash-strapped households. Property taxes are an overwhelmingly sub-national tax, and property tax reforms that include reforms of intergovernmental fiscal frameworks may turn out to be more successful. Réformer la taxe foncière, parent pauvre du régime fiscal L’impôt sur la propriété immobilière a récemment commencé à regagner de son ancienne importance, mais les recettes qu’il procure restent faibles, à peine plus de 1 % du PIB et avec de larges variations d’un pays à l’autre. Dans ce contexte, ce document examine les politiques en la matière dans les pays de l’OCDE et analyse les propriétés de l’impôt foncier en termes d’efficacité, de redistribution et de stabilisation. Malgré la hausse des prix des logements, les recettes de l’impôt foncier sont modestes, parce que la valeur fiscale des biens immobiliers est fixée à un niveau inférieur aux prix du marché ; et parce qu’une myriade d’exemptions fiscales réduisent l’assiette d’imposition et minorent les recettes. Les impôts fonciers sont considérés comme les moins préjudiciables à la croissance, et une taxe foncière pure est préférable à une taxe sur l’investissement. Les impôts fonciers peuvent être plus ou moins progressifs ou régressifs, en fonction de l’incidence fiscale et de la distribution des biens immobiliers entre groupes de revenus. Les impôts fonciers ont tendance à stabiliser les prix des logements, bien que cet effet soit assez minime. Enfin, les impôts fonciers peuvent favoriser une utilisation durable des terres. Des facteurs liés à l’économie politique expliquent pour une bonne part la résistance à la réforme de la fiscalité immobilière, qui pourrait englober entre autres des mesures visant les ménages pauvres et à court de liquidités. L’impôt foncier est essentiellement un impôt infranational, et les réformes qui s’emploient également à refondre le cadre budgétaire interadministrations seront probablement plus efficaces.

Suggested Citation

  • Hansjörg Blöchliger, 2015. "Reforming the Tax on Immovable Property: Taking Care of the Unloved," OECD Economics Department Working Papers 1205, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:1205-en
    DOI: 10.1787/5js30tw0n7kg-en

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    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Pierce O’Reilly, 2018. "Tax policies for inclusive growth in a changing world," OECD Taxation Working Papers 40, OECD Publishing.
    2. Oguzhan Akgun & Boris Cournède & Jean-Marc Fournier, 2017. "The effects of the tax mix on inequality and growth," OECD Economics Department Working Papers 1447, OECD Publishing.
    3. Josh Ryan‐Collins, 2021. "Private Landed Property and Finance: A Checkered History," American Journal of Economics and Sociology, Wiley Blackwell, vol. 80(2), pages 465-502, March.
    4. Isabelle Joumard & Alastair Thomas & Hermes Morgavi, 2017. "Making income and property taxes more growth-friendly and redistributive in India," OECD Economics Department Working Papers 1389, OECD Publishing.
    5. Christophe André & Hyunjeong Hwang, 2018. "Tax reform to support growth and employment in Finland," OECD Economics Department Working Papers 1468, OECD Publishing.
    6. Josh Ryan-Collins, 2021. "Breaking the housing–finance cycle: Macroeconomic policy reforms for more affordable homes," Environment and Planning A, , vol. 53(3), pages 480-502, May.
    7. Paetzold, Jorg & Tiefenbacher, Markus, 2016. "Distributional and revenue effects of a tax shift from labor to property," EUROMOD Working Papers EM13/16, EUROMOD at the Institute for Social and Economic Research.
    8. Awasthi, Rajul & Nagarajan, Mohan & Deininger, Klaus W., 2021. "Property taxation in India: Issues impacting revenue performance and suggestions for reform," Land Use Policy, Elsevier, vol. 110(C).
    9. Vítor Martins & Alessandro Turrini & Bořek Vašíček & Madalina Zamfir, 2021. "Euro Area Housing Markets: Trends, Challenges and Policy Responses," European Economy - Discussion Papers 2015 - 147, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    10. Jörg Paetzold & Markus Tiefenbacher, 2018. "Distributional and revenue effects of a tax shift from labor to property," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(5), pages 1215-1251, October.

    More about this item


    fiscal federalism; fiscalité locale; fédéralisme budgétaire; immovable property tax; impôt sur la propriété immobilière; local taxation;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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