In OECD and partner countries recurrent taxes on immovable property are among the most important subnational revenue sources and are used to finance key government responsibilities. An efficient and effective design and administration of these growth-friendly taxes are crucial for society to reap their numerous benefits that range from supporting land-use policies to promoting a healthy real estate market. Nonetheless, designing and managing these taxes in an efficient and effective manner is a complex endeavour. Recurrent property taxation is usually an element of a broader discussion on the intergovernmental fiscal framework, land-use policies and property rights, all of which vary widely across countries. As a result, reforms require a careful analysis of a country’s particularities, which makes every reform unique and challenging.

Acknowledging the importance and complexities of recurrent property taxation, especially in the context of inclusive growth and intergovernmental relations, the OECD has published numerous studies with empirical evidence and practical policy recommendations aimed at ensuring a more coherent and effective approach to recurrent property taxation reforms. This research draws upon these previous studies and complements them with a range of recent developments on property taxation across OECD and partner countries. This last decade was notably rich in terms of property tax reforms, with more than a dozen reforms being made in the last five years, offering valuable lessons that are here described and analysed.

An important strength of the OECD is its committees. This report was prepared by the Secretariat of the OECD Network on Fiscal Relations across Levels of Government, whose delegates reviewed the draft. The delegates of Working Party No. 2 on Tax Policy Analysis and Tax Statistics of the Committee of Fiscal Affairs also provided comments on the report, including country examples. The report itself was principally drafted by Pietrangelo de Biase, consultant, under the guidance of Sean Dougherty, Senior Advisor and Head of Secretariat to the Network on Fiscal Relations, with Bert Brys of the Centre for Tax Policy and Administration and Andrew Reschovsky, consultant, providing extensive comments on multiple drafts. Colleagues from across the OECD reviewed the report, including Boris Cournède and Margit Molnar (Economics Department), Michelle Harding, Pierce O'Reilly and Sarah Perret (Centre for Tax Policy and Administration), Isabelle Chatry (Centre for Entrepreneurship, SMEs, Regions and Cities) as well as an outside expert, Ehtisham Ahmad (LSE). Responsibility for the report’s content remains with the Secretariat and its principal authors.

This report was prepared at the request of the China Development Research Foundation (CDRF), who also provided background information and comments on the report. Therefore, some of the topics explored and recommendations outlined are tailored to the Chinese context. This focus on China is especially relevant now, as China’s government has announced that it will start pilot property tax schemes in some regions with the intention of eventually introducing a broad levy on residential properties. Such a tax could be a powerful tool to boost local government revenues while reducing wealth gaps and curbing speculation. Although the report’s recommendations are oriented towards China, we believe that most policy lessons in the cases examined and the comparative perspective provided can greatly support member and partner countries aiming at reforming their property tax and intergovernmental fiscal system.

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