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Article
Publication date: 6 August 2019

Lucy M. Nyabwengi and Owiti A K’Akumu

This study aims to evaluate the property tax base under the local government property taxation in Nairobi City and its implication on revenue adequacy of the city. Nairobi has…

Abstract

Purpose

This study aims to evaluate the property tax base under the local government property taxation in Nairobi City and its implication on revenue adequacy of the city. Nairobi has grown both in population and in physical extent resulting to increased demand for urban services. The city faces challenges of adequate infrastructure service provision against increasing demand. Property taxation if fully exploited can be a major source of city government revenue, which has been dwindling.

Design/methodology/approach

Literature review of property tax bases in the world and examination of best practices was done to highlight the inadequacies of property tax base administration in Nairobi. Primary data were gathered through interviews of officers in Nairobi City involved in the land rating process. Secondary data were obtained through documentary search and field survey of the study area.

Findings

The study established that Nairobi relies on a dual system of taxation, namely, site value rating and area rating. Tax is on vacant land only and excludes improvements. There are many legal exemptions and administrative exclusions from the tax base. The property tax registers do not include all the taxable properties and there is no regular updating of the tax registers. Nairobi relies on an outdated valuation roll whose values have no relation to the current market values.

Research limitations/implications

These factors have resulted to a narrow tax base, which affects the revenue potential of the city and its ability to adequately provide infrastructure services.

Originality/value

This is an original research, which relied mainly on primary data. To establish the property tax bases and the exempt properties in Nairobi, the researchers interviewed the officers at the Nairobi city land valuation and property management directorate using structured questionnaires. To address the third objective on whether the property tax base is complete and all-inclusive, the research relied on primary data. The research population was residential properties in Buruburu, Kilimani and Riruta areas of Nairobi city. The sample data on property details were collected from the Ministry of Land and Physical Planning (MLPP). The researchers then examined the records at the Nairobi City to evaluate whether the properties, which are registered at the MLPP, are charged land rates at the city level and at what amounts. This included properties under site value rating and area rating.

Details

Journal of Financial Management of Property and Construction , vol. 24 no. 2
Type: Research Article
ISSN: 1366-4387

Keywords

Article
Publication date: 1 February 1977

Harry W. Miley

Introduction During the last quarter of the nineteenth century and the first quarter of the twentieth, a great deal of literature was devoted to the virtues and deficiences of the…

Abstract

Introduction During the last quarter of the nineteenth century and the first quarter of the twentieth, a great deal of literature was devoted to the virtues and deficiences of the general property tax and its proposed replacements — a system of land value taxation, or the more extreme single‐tax advocated by Henry George. The controversy may seem academic to many who claim that the property tax is adequate and fulfills its purpose to the city — as its chief source of local government revenue. But the relationship between the far‐reaching economic effects of the property tax and the economic forces which help shape urban development warrants further study in order to clarify the issue for urban planners and developers attempting to solve cities' problems.

Details

Studies in Economics and Finance, vol. 1 no. 2
Type: Research Article
ISSN: 1086-7376

Article
Publication date: 5 March 2018

Richard Grover

The purpose of this paper is to review the issues involved in land value taxation and betterment and the issues involved in apportioning value between land and improvements.

Abstract

Purpose

The purpose of this paper is to review the issues involved in land value taxation and betterment and the issues involved in apportioning value between land and improvements.

Design/methodology/approach

The theoretical and valuation issues in betterment are reviewed and a case study of a betterment tax introduced in the UK is used to illustrate the practical problems in implementation.

Findings

The idea of land value taxation depends upon being able to apportion property values between land and improvements. This raises both theoretical and practical problems that are difficult to overcome.

Practical implications

The apportionment property values between land and improvements produces results that cannot be verified by market evidence, suggesting that an alternative approach be adopted through value-based recurrent property taxes revalued at frequent intervals.

Originality/value

Much of the literature has concentrated on the theoretical advantages of land value taxation rather than examining the practical problems of implementation. These suggest a different approach with less emphasis on betterment taxes and more on how recurrent property taxes can be an effective instrument for value capture.

Details

Journal of Property Investment & Finance, vol. 36 no. 2
Type: Research Article
ISSN: 1463-578X

Keywords

Article
Publication date: 5 August 2019

Vince Mangioni

Australia’s Future Tax System (2009) among its recommendations identified the need for realignment of tax revenue across the tiers of government in Australia, as well as the need…

Abstract

Purpose

Australia’s Future Tax System (2009) among its recommendations identified the need for realignment of tax revenue across the tiers of government in Australia, as well as the need to raise additional revenue from land-based taxes. In achieving these objectives, this paper aims to examine the revenues generated from land and how capital gains tax may be reconceptualised as a value capture tax resulting from the rapid urbanisation of Australia’s cities. The development of a theoretical framework realigns the emerging rationale of a value capture tax, as a means for revenue to be divested from central government in the form of capital gains, to sub-central government as a value capture tax.

Design/methodology/approach

A qualitative research methodology comprising grounded theory and phenomenological research is used in undertaking the review of tax revenue collection from state land tax, conveyance stamp duty, local government rating and Commonwealth capital gains tax. Grounded theory is applied for constant comparison of the data with the objectives of maximising similarities and differences in these revenues with an analytical construct as defined by Strauss and Corbin (1990, p. 61).

Findings

The paper finds that realigning revenue from land-based taxes against the principles of good tax design provides greater opportunity to raise additional revenue to fund public infrastructure while decentralising revenue from central government. It provides an alternate mechanism for revenue transfer from central to sub-central government while conceptually improving own source revenue from value capture taxation as a new revenue source.

Research limitations/implications

The limitation of this paper is the ability to quantify the potential increase that would be generated in the form of value capture revenue. It is demonstrated in the paper that capital gains tax took over 15 years for revenue generation to crystallise, a factor that would likely occur in the potential introduction of a value capture tax for funding transport infrastructure.

Practical implications

The pathway to introducing a value capture tax is through re-innovating capital gains tax as a value capture tax directly hypothecated to funding transport infrastructure that results in the uplift in values of the surrounding property from which revenue is raised.

Originality/value

This paper provides a new approach in contributing to funding the capital outlay of public infrastructure in lieu of central government consolidated revenue allocated through the Commonwealth Grants Commission. It provides a much-needed approach to decentralising revenue from the Commonwealth to sub-central government in Australia which has one of the most centralised tax systems in the OECD.

Details

Journal of Financial Management of Property and Construction , vol. 24 no. 2
Type: Research Article
ISSN: 1366-4387

Keywords

Article
Publication date: 6 January 2022

Tahiru Alhassan, Samuel Banleman Biitir and Emmanuel Kanchebe Derbile

The paper examined how local authorities have attempted to rate undeveloped land as a means of mobilising revenues and the challenges associated with implementing this policy…

Abstract

Purpose

The paper examined how local authorities have attempted to rate undeveloped land as a means of mobilising revenues and the challenges associated with implementing this policy guideline. It focused on current practices in terms of policy and administration, the availability of undeveloped urban land, its revenue potential, and ways to improve policy for local land taxation.

Design/methodology/approach

Drawing from the mixed-method approach both qualitative and quantitative data were collected. Officials of the Wa Municipal Assembly, Lands Commission, Land Use and Spatial Planning Authority were purposely selected based on their knowledge and the roles they play in property rating practice. They were interviewed to understand their perceptions and views on rating undeveloped lands. Stratified proportionate and simple random sampling methods were used to select respondents. The respondents included land and landed property owners in three selected neighbourhoods.

Findings

The paper found that there was the prevalence of undeveloped lands mainly held by speculators and individuals constrained by financial challenges to develop their parcels. The Wa Municipal Assembly is unable to implement the policy guideline on charging rent on undeveloped lands due to lack of adequate information and generally unwillingness to implement this provision. Besides, the current guideline is too prohibitive and cannot be implemented in its current form. However, there is a window of opportunity for the Assembly to build data on undeveloped lands and moderately begin the implementation of the policy guideline.

Practical implications

Urban growth in Ghana is characterised by leapfrog development with many patches of undeveloped land in and around cities. The property taxation policies largely do not focus on undeveloped land or unimproved site value. In Ghana, property rate policy on the tax base excludes undeveloped land. However, government policy guidelines prescribe the charging of rent on these lands by local authorities. This paper provides a comprehensive discussion on the revenue potential of undeveloped urban land and why local government authorities have not been able to harness this potential. The paper has therefore recommended ways local authorities can use to mobilise revenue from undeveloped urban land.

Originality/value

There is limited research in rating undeveloped urban land especially looking at it from the perspective of policy and implementation as well as current practices. The paper shed light on the prevalence of undeveloped urban land and the guidelines that exist help local governments mobilise revenue from these lands. It contributes to the understanding that local government can harness the revenue potential of undeveloped land if policy design and implemented regarding these lands is enhanced. The paper also provides a good background and framework for further studies.

Details

Property Management, vol. 40 no. 4
Type: Research Article
ISSN: 0263-7472

Keywords

Article
Publication date: 13 March 2009

Mason Gaffney

A tax based on land value is in many ways ideal, but many economists dismiss it by assuming it could not raise enough revenue. Standard sources of data omit much of the potential…

4073

Abstract

Purpose

A tax based on land value is in many ways ideal, but many economists dismiss it by assuming it could not raise enough revenue. Standard sources of data omit much of the potential tax base, and undervalue what they do measure. The purpose of this paper is to present more comprehensive and accurate measures of land rents and values, and several modes of raising revenues from them besides the conventional property tax.

Design/methodology/approach

The paper identifies 16 elements of land's taxable capacity that received authorities either trivialize or omit. These 16 elements come in four groups.

Findings

In Group A, Elements 1‐4 correct for the downward bias in standard sources. In Group B, Elements 5‐10 broaden the concepts of land and rent beyond the conventional narrow perception, while Elements 11‐12 estimate rents to be gained by abating other kinds of taxes. In Group C, Elements 13‐14 explain how using the land tax, since it has no excess burden, uncaps feasible tax rates. In Group D, Elements 15‐16 define some moot possibilities that may warrant further exploration.

Originality/value

This paper shows how previous estimates of rent and land values have been narrowly limited to a fraction of the whole, thus giving a false impression that the tax capacity is low. The paper adds 14 elements to the traditional narrow “single tax” base, plus two moot elements advanced for future consideration. Any one of these 16 elements indicates a much higher land tax base than economists commonly recognize today. Taken together they are overwhelming, and cast an entirely new light on this subject.

Details

International Journal of Social Economics, vol. 36 no. 4
Type: Research Article
ISSN: 0306-8293

Keywords

Article
Publication date: 26 February 2021

Flavio Gazzani

The purpose of this paper is to examine the introduction of three specific fiscal flexible mechanisms such as VAT surcharges/discounts, surcharges on import/manufacture of risk…

Abstract

Purpose

The purpose of this paper is to examine the introduction of three specific fiscal flexible mechanisms such as VAT surcharges/discounts, surcharges on import/manufacture of risk substances and maturity land tax to implement a new environmental fiscal reform that aims to reduce pollutions and emissions and avoid a regressive impact on low-income households using a feedback system.

Design/methodology/approach

The idea behind this article is to explore alternative environmental taxation system that aims to foster the transition to social-ecological sustainability without affect negatively poor and low-income households. It looks at the potential of environmental fiscal reform in terms of environmental benefits and present in the first section, evidence of some economic regressive impact caused by environmental fiscal reform in European Union from previous empirical studies. The article then introduces of a feedback mechanism to create a repayment system, such as rebate or cash transfer to compensate the regressive effect of the levy being added to the consumer price affecting low-income households in a very short period and push consumers to buy alternative eco-friendly products and services and to stimulate the market to offer them.

Findings

Lowering VAT rate for green products and services has the potential to increase demand for sustainable products and services and stimulate green jobs. Surcharges on import and manufacture of risk substances play a significant role to discourage the import of hazardous and pollutant substances by putting price on them and push the industrial sector towards a medium and long-term transition. Lowering taxes rates for buildings in inner cities encourage improvements and renovations, while raising tax on peri-urban areas discourage land speculation in areas with higher grade of biodiversity. This fiscal mechanism indirectly will reduce private and public transport emissions caused by urban sprawling and travel costs, reduce public infrastructure costs for connecting suburban area to the inner city and reduce the loss of urban-edge farmland area that are vital for smart urban growth.

Originality/value

The previous studies on the economic impact of the on environmental fiscal reform analysis, have focused on environmental aspects, economic growth and employment, but little on the regressive impact in short and medium terms on least wealthy sections of society. The proposed feedback mechanism aims to reduce distortion and inequalities caused by surcharges on existing taxation to low-income using monetary repayment measures, especially for products and services with elastic demand and no substitutes.

Details

International Journal of Social Economics, vol. 48 no. 5
Type: Research Article
ISSN: 0306-8293

Keywords

Book part
Publication date: 13 March 2019

Isaac William Martin

The local property tax is the oldest tax in the United States, as well as being the only substantial tax on landed wealth, a major part of the housing expense of most American…

Abstract

The local property tax is the oldest tax in the United States, as well as being the only substantial tax on landed wealth, a major part of the housing expense of most American families, and the most important revenue source for local governments. It is also increasingly limited by state law. This chapter presents a synthetic review of the literature on property tax limitation laws. Property taxation is a crucial resource for local governments because it is primarily a tax on real estate, and land is the least mobile tax base. A tax on the market value of real estate may have the effect of transmitting real estate price shocks to individual land users. Property tax limitation laws provide some homeowners with social protection from such market-induced economic shocks, but they do so at the price of a substantial reduction in state capacity. A meta-regression analysis of published studies finds that property tax levy limitations, on average, reduce local government budgets by as much as 5%. The potential implications for provision of other public goods, including social protection for other groups, are discussed.

Details

The Politics of Land
Type: Book
ISBN: 978-1-78756-428-2

Keywords

Book part
Publication date: 15 July 2009

Ross B. Emmett and Kenneth C. Wenzer

Dublin, Wednesday, 1 a.m., Aug. 9, 1882.

Abstract

Dublin, Wednesday, 1 a.m., Aug. 9, 1882.

Details

Henry George, the Transatlantic Irish, and their Times
Type: Book
ISBN: 978-1-84855-658-4

Open Access
Article
Publication date: 31 October 2018

Willem K. Korthals Altes

This paper aims to compare and review alternative ways to adjust public ground leases.

1933

Abstract

Purpose

This paper aims to compare and review alternative ways to adjust public ground leases.

Design/methodology/approach

Based on principles derived from a review of scientific literature, alternatives for the extension of leases are discussed based on the case of Amsterdam.

Findings

Many alternatives lead public ground-lease systems to produce results that are the opposite of what they are intended to be (as inspired by Henry George): new improvements result in higher rent, but additional location values do not result in higher rent. One exception is the lease-adjustment-at-property-transaction alternative, which may nevertheless result in fewer transactions.

Social implications

Public leasehold systems are highly contested with regard to the extension of leases. Such systems are often aimed at capturing land-value gains. In practice, however, this tends to be more difficult than expected. Value capture by authorities, as intended by the system, results in counter-movements of lessees, who often gain public support to set lower leases. These political processes may even result in the termination of such public ground-lease systems. This paper reports on a search for possible solutions.

Originality/value

The comparison of various alternatives to ground-lease extension based on principles derived from literature is new, and it contributes insight into public ground-lease systems.

Details

Journal of European Real Estate Research, vol. 12 no. 1
Type: Research Article
ISSN: 1753-9269

Keywords

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