Preliminary communication

https://doi.org/10.3326/pse.45.2.5

An overview of the taxation of residential property: is it a good idea?

Marta Rodriguez-Vives ; Principal Economist at Fiscal Policies Division, European Central Bank, Frankfurt am Main, Germany

Abstract

This article examines the taxation of property in the residential market as a potential revenue-raising tool in public finance. Economists generally consider taxing property to be less distortionary than taxing other tax bases. It ranks well in terms of trade-offs across long-term growth and inequality considerations. Although countries have different societal preferences, recourse to property taxation is not generally widespread. Using panel data methods and stochastic frontier analysis, we provide evidence that government revenue from property taxation is relatively inelastic to house price and quantity developments, and that countries with a higher implicit tax rate tend to be more efficient at collecting the revenue. Despite the increase of prices since 2014, low revenues can be the result of low effective tax rates and outdated house valuation systems.

Keywords

property tax; households; housing policies; housing prices; wealth inequality

Hrčak ID:

258397

URI

https://hrcak.srce.hr/258397

Publication date:

7.6.2021.

Visits: 928 *