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INTRODUCTION

1. Introduction

T

his guide provides government officials and community leaders at all levels with a discussion of the alternatives for taxes based on land and immovable improvements. The discussion includes the reasons why land and property taxes (LPTs) are often an important source of local revenue, what the options are for designing such taxes and what needs to be considered in their implementation. Land policies, of which taxing policy represents one component, are widely recognized as critical elements in broader social policies to lift the poor and secure sustainable vibrant communities. To cite just one example, a World Bank policy research report states, “Land policies are of fundamental importance to sustainable growth, good governance, and the well-being of, and the economic opportunities open to, both rural and urban dwellers - particularly the poor.� (Deininger, 2003) In every society, land policy is a complex web of social and legal institutions often the result of centuries of social evolution. To isolate any given aspect of that web inherently runs the risk of focusing attention while overlooking key linkages and important contextual factors. Be that as it may, communities need the resources necessary to improve infrastructure and services, and there is one often overlooked or at least underutilized tool that merits the attention of urban policy makers and community leaders: taxes on land and property. To see why this is so, the next section presents the rationale for LPTs. Section 3 compares LPTs and defines some commonly encountered terms relating to LPTs. Section 4 then argues that a successful LPT must reflect actual community practices and capacities along four dimensions and should recognize the pervasive nature of corruption in many countries. Section 5 introduces the idea

Land Policy: The set of agreed principles to govern ownership (or access to), use and management of land resources to enhance their productivity and contribution to social, economic, political and environmental development and poverty alleviation. (Framework and Guidelines on Land Policy in Africa, 2009, pg. xiii) of the LPT revenue identity, or what the factors are that influence how much revenue is actually collected from the LPT. Section 6 describes what should be included in enabling law and discusses the design options for defining taxable property and who must pay the tax. Section 7 continues the discussion of policy options with a discussion of how taxable value can be determined and tax rates set. Section 8 focuses on administrative and implementation issues. The section also discusses sharing responsibility between multiple levels of government in order to better achieve both equity and efficiency in administering the LPT. Section 9 provides some basic approaches for estimating the revenue potential of the LPT. Section 10 describes how LPTs can be used for both economic development and to further social policy objectives, including regularizing informal housing settlements and making the distribution of land more equitable. Finally, Section 11 summarizes the key points that government officials and community leaders should take away from this guide and suggests the way forward for those interested in implementing or improving an LPT in their community. Following Section 11 are a glossary of key terms and a list of reference works cited along with additional relevant readings.

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Land and Property Tax  

In the Guide, you will find answers to questions such as why land and property taxes are often an important source of local revenue, what th...

Land and Property Tax  

In the Guide, you will find answers to questions such as why land and property taxes are often an important source of local revenue, what th...

Profile for unhabitat
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