The Taxation of Land and Property - Institute for Fiscal Studies

16 Sep 2012

Most taxes nowadays are levied on flows of income and of expenditure. But land and property have been taxed for centuries-certainly for longer than income-and they continue to form an important part of the tax base in most advanced economies.

There are good economic reasons for this. The supply of property, and especially land, is not very responsive to its price, which means that it can be taxed without significantly distorting people's behaviour. The ownership of land is also generally visible and easily established, which makes it relatively straightforward to identify who should be paying the tax. The fact that land and property have identifiable and unchangeable geographic locations also makes them natural tax bases for the financing of local government.


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