Can land taxes foster sustainable development? An assessment of fiscal, distributional and implementation issues. (November 2018)

• Record Type: Journal Article
• Authors: Kalkuhl, Matthias; Fernandez Milan, Blanca; Schwerhoff, Gregor; Jakob, Michael; Hahnen, Maren; Creutzig, Felix
• Is Part Of: Land use policy. Volume 78(2018)
• Page Start: 338
• Page End: 352
• Publication Date: 2018-11
• Subjects: Fiscal policy -- Public economics -- Optimal taxes -- Tax incidence -- Land use; Land use -- Periodicals; Land use -- Government policy -- Periodicals; Sol, Utilisation du -- Périodiques; Sol, Utilisation du -- Politique gouvernementale -- Périodiques; Electronic journals; 333.7305
• DOI: 10.1016/j.landusepol.2018.07.008
• Languages: English
• ISSNs: 0264-8377

Abstract

Abstract: Economists argue that land rent taxation is an ideal form of taxation as it causes no deadweight losses. Nevertheless, pure land rent taxation is rarely applied. This paper revisits the case of land taxation for developing countries. We first provide an up-to-date review on land taxation in development countries, including feasibility and implementation challenges. We then simulate land tax reforms for Rwanda, Peru, Nicaragua and Indonesia, based on household surveys. We find that (i) land taxes provide a substantial untapped potential for tax revenues at minimal deadweight losses; that (ii) linear land value taxes tend to put a high relative burden on poor households as land ownership is pervasive; (iii) non-linear tax schemes could avoid adverse effects on the poor; and that (iv) with technological advances, administrative costs of land taxes have reduced substantially and are outweighed by tax revenues and co-benefits of formalized land tenure. Enforcement and compliance remain, however, a key challenge.