Essay on The Cost Of Property Tax

723 Words Jul 7th, 2015 3 Pages
In looking at property tax in developing countries it was put forward that there was a greater need for the revenues that are derived from this type of tax to finance the expenditure of the local government therefore a heavy reliance is placed on it (Bahl and Martinez-Vazquez 2007). The advantages discussed are: revenue potential and stability, fairness and equity, compliance costs, tax base competition and land use efficiency. While the disadvantages discussed in regards to property tax are: administration cost and enforcement.
2.5.1 Advantages
Revenue Potential and Stability
The potential of property tax as a significant revenue producer for local governments is huge , this is because the value of land and improvements on the land can be measured. Land and improvements on land is growing and will become if not already a broad base in almost all countries. Therefore by applying legislative tax rate can amass large amounts of revenues for local authorities; the application of a tax rate in addition to a good valuation system and a high rate of compliance can make a stable property tax system.
Fairness and Equity
The property tax is a charge for benefit that are received, thus it can be regarded as efficient and fair. The higher the property values the more benefits are received by the taxpayer in that area this may be businesses or residential properties, thus the benefit is proportion to value .In developing countries, there is a large disparity between the rich and the…

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