Building Comprehensive Property Tax Systems in Lower-Income Countries: ‘Cadaster-First’ versus ‘Property Tax-First’ Approaches

Wilson Prichard, Camille Barras, Colette Nyirakamana, Marie-Reine Mukazayire

An extensive literature has documented the risks posed by the adoption of legal, policy and institutional frameworks modelled on the experiences of wealthier countries, but which may be inappropriate to the contexts, needs and constraints of lower-income countries. This paper explores one such example related to the construction of effective property tax systems. Building a comprehensive map of all properties in a given jurisdiction is the foundation for effective and equitable property taxation. Yet, most lower income countries have highly incomplete lists of taxable properties along with incomplete or unreliable addressing systems that complicate administration. This has often been presented as a problem of resources and capacity. By contrast, this paper argues that the most important barrier often lies in inappropriate laws and institutional structures, often inherited from the colonial period. Most countries continue to mandate that properties should be legally registered with the national government before being eligible for property taxation. While conceptually intuitive, it has posed insurmountable practical barriers to effective administration owing to high costs, institutional complexity, vulnerability to corruption and misaligned incentives. This paper presents evidence of the benefits of shifting away from such “cadaster-first” approaches in favor of more locally appropriate “property tax first” approaches to registering properties for tax purposes.

Event: World Bank Land Conference 2024 - Washington

Document type:Building Comprehensive Property Tax Systems in Lower-Income Countries: ‘Cadaster-First’ versus ‘Property Tax-First’ Approaches (454 kB - pdf)