IMF How To Notes

How to Design and Implement Property Tax Reforms

By Martin Grote, Jean-François Wen

September 19, 2024

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Martin Grote, and Jean-François Wen. "How to Design and Implement Property Tax Reforms", IMF How To Notes 2024, 006 (2024), accessed December 21, 2024, https://doi.org/10.5089/9798400288753.061

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Summary

Property taxes are often under-exploited sources of local public revenues. A broad-based tax, raised at modest rates, can potentially generate significantly higher revenues in many countries, and meet most of the costs of improved local public services. This note provides a practical guide to designing and implementing reforms to recurrent taxes on immoveable property and real estate transfer taxes. It addresses the fundamental policy choices regarding the property tax base and tax rate, and the key functions of the tax administration for managing collections – valuation, billing, and enforcement. The advice in the note stems from a review of the literature and insights gained from the experiences of the Fiscal Affairs Department in delivering capacity development on property taxes. It covers and updates some of the analytical work by Norregaard (2013) while providing granular advice on practical aspects of reforming property taxes. The note is motivated by the resource mobilization needs of developing countries, but the design considerations are also pertinent for advanced and emerging market economies seeking to increase the revenue productivity of property taxes.

Subject: Estate tax, Property tax, Revenue administration, Tax administration core functions, Taxes, Transaction tax

Keywords: Africa, Estate tax, Implement property tax reform, Property tax, Property tax administration, Property tax system, Property tax tax collection, Real estate, Real property transfer tax, Recurrent tax, Revenue identity, Tax administration core functions, Tax reform, Transaction tax

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