Economists argue that land rent taxation is an ideal form of taxation as it causes no deadweight losses. Nevertheless, pure land rent taxation is rarely applied. This paper revisits the case of land taxation for developing countries. We first provide an up-to-date review on land taxation in development countries, including feasibility and implementation challenges. We then simulate land tax reforms for Rwanda, Peru, Nicaragua and Indonesia, based on household surveys. We find that (i) land taxes provide a substantial untapped potential for tax revenues at minimal deadweight losses; that (ii) linear land value taxes tend to put a high relative burden on poor households as land ownership is pervasive; (iii) non-linear tax schemes could avoid adverse effects on the poor; and that (iv) with technological advances, administrative costs of land taxes have reduced substantially and are outweighed by tax revenues and co-benefits of formalized land tenure. Enforcement and compliance remain, however, a key challenge.
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Land Use Policy is an international and interdisciplinary journal concerned with the social, economic, political, legal, physical and planning aspects of urban and rural land use. It provides a forum for the exchange of ideas and information from the diverse range of disciplines and interest groups which must be combined to formulate effective land use policies.
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