Land value is determined primarily by external factors, mainly changes that occur in the neighborhood or other parts of the city rather than by direct actions of the landowner. This observation is especially valid for small lots whose form or type of occupancy do not generate sufficiently strong externalities to increase their own value retroactively; that is, a small lot generally does not have a significant impact on those very external factors that could affect its own value. However, large urban projects (grandes proyectos urbanos or GPUs) do influence those factors, and also the value of the land that supports them. Herein lies the essence the Lincoln Institute’s interest in such projects.

We propose two perspectives for analyzing GPUs that complement and contrast with others that formerly predominated in this debate. First, these projects can be a stimulating force for immediate urban change that is capable of affecting land values, and therefore land use, for large areas if not an entire city region. This view is focused more on urban design or urbanism and stresses the study of the physical, esthetic and symbolic dimensions of large urban projects. A second approach, covering the field of regulation, attempts to understand the land value appreciation generated by the implementation and operation of these projects as a potential means for self-support and economic feasibility. It analyzes the role of GPUs in providing a new function for certain areas of the city. Both perspectives require a more holistic understanding that includes the diversity and levels of complexity of the projects, their relation to the city plan, the type of regulatory framework they require, the role of the public and private sectors in managing and financing them, land taxation and fiscal policies, and other factors.

These large projects are not new to Latin America. In the early twentieth century, many cities were impacted by programs that used public-private management arrangements, including outside players (national and international) and complex financial structures. Some projects had the potential to trigger urban processes capable of transforming their surroundings or even the city as a whole, as well as accentuating the preexisting socio-spatial polarization. Often the projects were layered over existing regulations, contributing to questions about the urban planning strategies in force at the time. Large urban developers and utility companies (English, Canadian, French and others) coordinated the provision of services with complex real estate development operations in almost all the major cities of Latin America.

Today large projects attempt to intervene in especially sensitive places to reorient urban processes and create new urban identities on a symbolic level. They also aim to create new economic areas (sometimes territorial enclaves) able to foster an environment protected from urban poverty and violence, and more favorable to domestic or international private investment. When describing the motives that justify these programs, the rhetoric focuses on their instrumental role in strategic planning, their alleged contribution to urban productivity, and their effectiveness in boosting their intercity competitive position.

In a context marked by transformations due to globalization, economic reforms, deregulation and the introduction of a new focus on urban management, it is not surprising that these programs have been the subject of much controversy. Their scale and complexity often spur new social movements; redefine economic opportunities; put into question urban development regulatory frameworks and land use rules; strain local finances; and expand political arenas, thus altering the roles of urban stakeholders. An additional complication is the long time frame for executing large urban projects, which usually exceeds the terms of municipal governments and the limits of their territorial authority. This reality presents additional management challenges and formidable dilemmas within the public and academic debate.

The Lincoln Institute’s contribution to this debate is to underscore the land component in the structure of these large projects, specifically the processes associated with urban land management and the mechanisms for land value capture or the mobilization of land value increments for the benefit of the community. This article is part of a broader, ongoing effort to systematize recent Latin American experience with GPUs and to discuss the relevant aspects.

A Wide Range of Projects

As in other parts of the world, large urban projects in Latin America comprise a wide range of activities: restoration of historic downtown areas (Old Havana or Lima); renovation of neglected downtown areas (São Paulo or Montevideo); redevelopment of ports and waterfronts (Puerto Madero in Buenos Aires or Ribera Norte in Concepción, Chile); reuse of old airports or industrial zones (the Tamanduatehy artery in Santo Andre, Brazil, or the Cerrillos airport in Santiago, Chile); expansion zones (Santa Fé, Mexico, or the former Panama Canal zone); residential or neighborhood improvement projects (Nuevo Usme in Bogotá or Favela Bairro in Rio de Janeiro); and so on.

Land management is a key component in all of these projects, and it presents diverse sets of conditions (Lungo 2004; forthcoming). One common trait is that the projects are managed by a government authority as part of a city project or plan, even though they enjoy private participation in several respects. Thus exclusively private programs, such as shopping centers and gated communities, are a different category of development project not included in this discussion.

Scale and Complexity

The minimum threshold of scale, in terms of surface area or amount of financial investment, for a project to meet the GPU criteria depends on the size of the city, its economy, social structure and other factors, all of which help define the complexity of the project. In Latin America projects often combine large scale and a complex set of players associated with key roles in land policy and management, including various levels of government (national, provincial and municipal), private entities and community leaders from the affected area. Even relatively small upgrading projects are often formidably complex with regard to the land readjustment component.

There is obviously a huge difference between a project proposed by one or a few owners over a large area (such as ParLatino, an abandoned industrial site in São Paulo) and a project involving the cooperation of many owners of small areas. The latter requires a complex series of actions capable of generating synergies or sufficient external economies to make each action economically viable. Most projects fall between the two extremes. They often involve the prior acquisition of rights over smaller parcels by a few agents in order to centralize control over the type and management of the development.

The key to analysis and design of GPUs in Latin America lies in the ability of the institutional organization in charge of project management to incorporate and coordinate scale and complexity appropriately. Governmental corporations have been created in some cases, but they operate autonomously (as in Puerto Madero) or as special public agencies attached to the central or municipal governments (as in the housing program being developed in the city of Rosario, Argentina, or the Nuevo Usme program in Bogotá). The case of the failed project to build the new Mexico City airport demonstrates the negative consequences of not correctly defining this fundamental aspect of GPUs.

Relationship of GPUs to the City Plan

What is the point of developing GPUs when the city has no comprehensive urban development plan or socially shared vision? It is possible to find situations where execution of GPUs may stimulate, enhance or strengthen the city plan, but in practice many such projects are established without any plan. One of the main criticisms aimed at GPUs is that they become instruments for excluding citizen participation in decision making about individual elements of what is expected or supposed to be part of an integrated urban project, as is normally provided for in a city’s master plan or land use plan.

This is an interesting debate within the framework of urban policies in Latin America, since urban planning itself has been criticized as being elitist and exclusionary. Some authors have concluded that urban planning has been one if not the main cause of the excesses of social segregation typical of cities in the region. In this context the recent popularity of GPUs can be seen as a reaction of the elite to redemocratization and participatory urban planning. Others may view GPUs as an advanced (and perverse) form of traditional urban planning; a yielding to the failures or ineffectiveness of urban planning; or even a lesser evil because at least they ensure that something is done in some part of the city.

There are many challenges for GPUs regarding their relationship to a city plan. They can help build a city plan where none exists, alter traditional plans, or do what we might call “navigating through the urban fog” if the former paths are not viable. In any case, land management proves to be a critical factor, both for the plan and for the projects, because it refers to the fundamental role of the regulatory framework covering urban land use and expansion.

Regulatory Framework

The preferred regulatory solution would be a two-part intervention: on one hand, maintaining general regulations for the whole city but changing the conventional criteria to be more flexible in absorbing the constant change taking place in urban environments; and on the other, allowing specific regulations for certain projects but avoiding regulatory frameworks that may contradict the stated goals of the city plan. Urban Operations, a specific and ingenious instrument devised under the Brazilian urban development legislation (Statute of the City Act of 2001), has been used widely to accommodate these dual needs. The city of São Paulo alone has 16 such operations in effect. Another version of this instrument is the so-called “partial planning” provision to readjust large tracts of land, which is included in Colombia’s equally innovative Law 388 of 1997.

Again in practice we see that exceptions are often granted in an apparently arbitrary manner, and regulatory restrictions are frequently ignored. The point is that neither type of regulation is submitted to any assessment of its socioeconomic and environmental value, thus losing a significant portion of its justification. Given the financial and fiscal fragility of cities in Latin America, what prevails is an extremely low capacity for public discussion of the requests made by the proponents of GPUs. The absence of institutional mechanisms that would make these negotiations transparent makes them more venal, insofar as they expose the capacity to discuss other, less prosaic legal challenges.

Public or Private Management and Financing

What is the desirable combination of public and private management of these projects? To guarantee that public management of a large urban project fulfills its function, land use must be monitored and regulated, although the degree to which the control should be exercised, and on which specific components of land ownership rights, is unresolved. Ambiguity in the courts and the uncertainties associated with the development of GPUs often result in public frustration over unanticipated outcomes favoring private interests. The proper balance between effective ex ante (GPU formulation, negotiation and design) and ex post (GPU implementation, management, operation and impacts) controls over land uses and rights is at the heart of the problem. Typically in the Latin American experience with GPUs there is a huge gap between original promises and actual outcomes.

In recent years the management of GPUs has been confused with the utility and feasibility of public-private partnerships, such as those set up in many countries to carry out specific projects or programs. Some stakeholders even propose the possibility of privatizing urban development management in general. If the private sector has complete control over the land, however, GPUs are severely limited in their ability to contribute to socially sustainable urban development, despite the fact that in many cases the projects contribute significant taxes to the city (Polese and Stren 2000).

The preferred public management system should call on the greatest social participation possible and include the private sector in the financing and implementation of these projects. The large urban programs that seem to contribute the most to the development of a city are those based on public management of the land.

Land Value Appreciation

There is consensus around the fact that GPUs generate an appreciation in land value. Differences emerge when we try to assess the real amount of this appreciation, if it is to be redistributed and, if so, how it should be shared and whom it should benefit, both in social and territorial terms. Again we have the public-private conundrum, wherein this redistribution formula often leads to the appropriation of public resources by the private sector.

The appreciation of land value as a resource that can be mobilized for self-financing the GPU or transferred to other areas of the city could be a way to measure whether or not public management of these projects is a success. However, we rarely have an acceptable estimate of this land value increment. Even in the Puerto Madero project in Buenos Aires, which is considered to be a success, to date there is no evaluation of the land value increment associated with either the properties within the project itself or those in neighboring areas. As a result, the discussion of possible redistribution has not gone beyond a few educated guesses.

GPUs conceived as instruments for achieving certain strategic urban goals are generally registered as successes when they are executed according to plan. The question regarding to what extent these goals were actually reached is not fully answered, and it is often conveniently forgotten. The hypothesis that best seems to fit Latin American experiences with GPUs is that the apparent lack of interest in goals has little to do with any technical inability to make the source of the increased value transparent. Rather, this inattention comes from the need to hide the role of public management in facilitating the private sector’s capture of the land value increment in general, if not its capture of public resources used to develop the construction project itself.

We are not feigning ignorance of or trying to minimize the difficulties in advancing knowledge about how land value appreciation is formed and in measuring its size and circulation. Indeed, there are many technical obstacles to overcome when faced with complicated land rights, the vicissitudes or permanent flaws in cadastres and property registers, and the lack of an historical series of geo-referenced real estate values. Even the smallest plan must distinguish between the appreciation generated by the project itself and that generated by urban externalities that almost always exist despite the scale of the project, the different sources and rates of appreciation, and so forth. Some encouraging work has been done on measuring and evaluating the land value increment associated with development, but technical obstacles seem to be less relevant than the lack of political interest in knowing how these projects are being managed.

When land value increments are created, they are usually distributed in the immediate project area or nearby. This principle is based on the need to finance a specific project within the area, to offset certain negative impacts, or to implement actions such as relocating precarious housing sited on the land or its surroundings that may detract from the image of the new project. Given the socioeconomic conditions found in the typical Latin American city, it is not hard to see that the preferred use of the captured value is to earmark it for projects of a social nature in other parts of the city, such as housing complexes. In fact a significant part of the generated land value increment results exactly from the removal of negative externalities produced by the presence of low-income families in the area. Needless to say, this strategy raises conflicting opinions.

There is certainly a need to devise better legislation and instruments to overcome the trade-off between socially mobilized land value increment and gentrification through displacement. Despite the lack of hard empirical studies, there are reasons to believe that a broader understanding of the impacts of these projects will show that some of the compensatory intracity transfers may actually prove to be counterproductive. For example, the resulting higher land price differences and social residential segregation may involve higher social costs that will need to be addressed by additional public resources in the future (Smolka and Furtado 2001).

Positive and Negative Impacts

On the other hand, the negative impacts caused by GPUs often obscure the varied positive impacts. The challenge is how to reduce the negative impacts produced by this type of urban intervention. It soon becomes clear, whether directly or indirectly, that the role of land management is critical to understanding the effects of large interventions in urban development, planning, regulation, socio-spatial segregation, and the urban environment and culture. Scale and complexity have a role as well, depending on the type of impact. For example, scale is more relevant to environmental and urban development impacts, while complexity is more critical in terms of social impact and urban policy.

As already mentioned, the gentrification that these projects generally produce encourages the displacement of the existing, usually poor, inhabitants from the new project area. However, gentrification is a complex phenomenon that requires further analysis of its own negative aspects, as well as how it could help to raise living standards. It could be more useful to move on from simple mitigation of unwanted negative impacts to better management of the processes that create these risks.

Any GPU can have positive or negative effects, depending on the way urban development is managed, the role of the public sector, and the existing level of citizen participation. We have emphasized that one of the central issues is management of the land and of the land value increment associated with these projects. Large urban projects can not be analyzed in isolation from the entire development of the city. Likewise, the land component must be evaluated with respect to the combination of scale and complexity that is appropriate for each project.

Mario Lungo is a professor and researcher at the Central American University (UCA José Simeón Cañas) in San Salvador, El Salvador. He formerly served as executive director of the Office of Planning for the Metropolitan Area of San Salvador.

Martim O. Smolka is senior fellow of the Lincoln Institute of Land Policy, cochairman of the Department of International Studies and director of the Program on Latin America and the Caribbean.

References

Lungo, Mario, ed. 2004. Grandes proyectos urbanos (Large urban projects). San Salvador: Universidad Centroamericana José Simeón Cañas.

Lungo, Mario (forthcoming). Grandes proyectos urbanos. Una revisión de casos latinoamericanos (Large urban projects: A review of Latin American cases). San Salvador: Universidad Centroamericana José Simeón Cañas.

Smolka, Martim and Fernanda Furtado. 2001. Recuperación de plusvalías en América Latina (Value capture in Latin America). Santiago, Chile: EURE Libros.

Polese, Mario and Richard Stren. 2000. The social sustainability of cities. Toronto: University of Toronto Press.

Sonia Rabello de Castro has a Ph.D. in law and is a professor of administrative law and urban law at the University of the State of Rio de Janeiro (UERJ). She was elected in 2008 as a member of the Municipal Legislative Council of the City of Rio de Janeiro, representing the Green Party. She is also a member of the Ethics and Mores Parliamentary Committee and represents the Legislative Municipal Council at the Environmental Municipal Council.

From 1992 to 1996 she was attorney general for the Municipality of Rio de Janeiro, where she collaborated in the development of several far-reaching urban projects, including the Favela-Bairro program. She has also worked as director of legal services for a number of public entities and has published numerous articles on urban development, housing, governance, public administration, and preservation of the cultural patrimony. Her book on Preservation of the Brazilian Cultural Patrimony (Preservação do Patrimônio Cultural Brasileiro) is considered a basic reference for administrative and juridical decisions on this topic.

Land Lines: How did you become associated with the Lincoln Institute of Land Policy?

Sonia Rabello: I met Martim Smolka, the director of the Program on Latin America and the Caribbean, in the late 1990s, when I was researching how the traditional concept of property rights based upon civil law could be transformed in the context of urban law. The development of new urban laws could lead to conceptual changes in the way the right to property was originally understood, given the need to adapt the concept to meet the social and economic requirements of urban development. At that time, Brazil had not yet approved the federal urban development law known as the City Statute (Estatuto da Cidade), although the Brazilian Federal Constitution of 1988 had introduced the principle of urban development as a social function subject to public policy.

As a visiting fellow at Lincoln House in 2000 I became convinced of the need to create a new, more modern concept of property rights that would reflect the current urban reality in Latin America and allow for the use of the city by all citizens, whether they are property owners or not.

Land Lines: Can you explain this property rights concept further?

Sonia Rabello: It is the need to distinguish the right to own land from the right to build on that land. The Civil Code in Latin American countries follows the French model, which defines real estate property rights as having three components guaranteed to the owner: the right to use the property; the right to receive income accruing from the property; and the right to dispose of the property. Only the owner can exercise these rights. The right to build is not in itself an inherent component of this property right, but a condition for the owner to use the property, without which the utility of the property would be voided—and in this case the very meaning of the property right would be lost.

For the owner to exercise her ownership right to use the property, the public authority, through established urban planning regulations, must allocate a minimum building coefficient to that land. The building coefficient refers to the amount of development allowed on a parcel, also known as floor-area-ratio (FAR). The allocation of an equitable and free minimum building coefficient applied to all properties uniformly has a double function. First, it guarantees to all owners and possessors an economic use of their property. Second, it precludes the occurrence of unjust differences in the allocation of building coefficients among owners.

Land Lines: Why is this concept important for Latin America?

Sonia Rabello: All Latin American countries, including Brazil, have been addressing urban regulation and land policy at the national level, especially since the economic stabilization and redemocratization during the 1990s, when the need to consider the so-called accumulated social debt became a prominent issue. At the time, Latin American cities were experiencing acute problems due to the lack of basic infrastructure services such as sewer systems, public spaces, transportation, and access to affordable housing, as well as the challenge of creating a more equitable distribution of costs and benefits in the urbanization process.

Land Lines: How relevant is Brazil’s City Statute in this process?

Sonia Rabello: The City Statute, which was approved in 2001, confirms the distinction between the right to own land and the right to build, a distinction that had been discussed and implemented since the 1970s in São Paulo and other Brazilian cities. The expression “right to build” as used in the Brazilian Civil Code had led many landowners to assume that their right to own land also included the right to build on the land, in keeping with urban legislation and norms.

How much and what can be built is reflected in the price of land. That is, parcels with a higher building coefficient than others, or parcels where commercial use is permitted as well as residential use, sell at prices that incorporate the benefits freely given to landowners by the public authorities. When this happens, landowners appropriate as their private good the building rights provided by urban law, even though they had not invested in the infrastructure or services needed to support the land development. As a result, the costs of urbanization fall entirely on the public authority while private citizens profit, contradicting the general legal principle barring enrichment without just cause.

Land Lines: What does the principle of “enrichment without just cause” mean?

Sonia Rabello: This general principle of law, accepted in most Latin American countries, deems unacceptable an increase in private wealth that does not result from the person’s own labor or investment—that is, a legitimate cause pertaining to the person who benefits financially. In Brazil this principle is explicit in the legislation, specifically in the Civil Code, and is applicable to the entire juridical system.

Land Lines: How does the City Statute provide for the separation of the right to own land from the right to build?

Sonia Rabello: This concept was introduced through the instrument known as “charge for awarded building rights” (outorga onerosa do direito de construir) in Art. 28: “The master plan may delineate areas where the building right can be exercised above the basic coefficient adopted, given a counterpart payment by the beneficiary.” It is important to emphasize that the City Statute is a federal law that addresses the content of real estate property rights and has the same hierarchical standing as the Civil Code. Thus, if the law states that the public authority shall charge for a given right, then that right does not belong to the person to whom it is given.

Land Lines: In what way does the “charge for awarded building rights” help to preclude enrichment without just cause?

Sonia Rabello: The charge extracts the corresponding value of such rights from the land price. In other words, without that charge, the land price would include the value of the building rights freely granted to the landowner by the urban planning legislation. Without the charge, when the landowner sold the land he would be paid according to its market value, which includes the maximum use permitted on that land.

Land Lines: However, if I buy land expecting to build at a given floor-area-ratio that exceeds the basic coefficient and the public authority charges for these awarded building rights, wouldn’t that imply paying twice for the land?

Sonia Rabello: No, as long as the system of acquiring building rights from the public authority is well-established. Under the new law, building rights above the minimum coefficient belong to the city as a whole and must be purchased separately from the public authority. As a result, when paying the landowner, the buyer discounts from the land price the value of the additional awarded building rights.

Land Lines: In what other ways is this charge implemented to benefit society?

Sonia Rabello: In addition to addressing unjust enrichment, the principle concerns the legitimacy of recovering the added land value generated by public sector interventions in the urbanization process, and to prevent the added value accruing to the landowner. This principle is also reflected in the compensation paid for urban land expropriation. When not recovered by the public authority, the value of the additional building rights becomes an integral part of the market price. If the public authority expropriates that land, the landowner will receive compensation equivalent to the market price, which includes the land value plus the value of the building coefficient granted by the public authority free of charge.

Land Lines: Since the property tax is imposed on real estate property, wouldn’t this charge constitute double-taxing?

Sonia Rabello: To understand why this is not the case we need to look at the important distinction between the Colombian and Brazilian legislation. The Colombian law classifies the value capture charge as a tax, but in Brazil it is defined as an instrument for the public authority to recover a good that belongs to society. That is, the nature of the charge is a responsibility relative to the costs of urbanization. A decision by the Brazilian Supreme Court (RE509422 STFSC of 2008) resolved this issue by ruling that the charge for awarded building rights is not a tax but a payment for which the landowner is responsible.

I think this juridical opinion is coherent given that a tax corresponds to a contribution to the public treasury from one’s private assets, but, as noted, awarded building rights are not privately owned but are a public good that belongs to the city as a whole. To classify the value capture charge as a tax suggests a juridical inconsistency, since taxation is a form of assessing private wealth to finance public goods and services. This is not the case in Brazil, since the charge is levied on an essentially public asset.

Land Lines: Does the judiciary in Latin America accept and implement these concepts?

Sonia Rabello: Not uniformly or consistently. These juridical concepts fundamentally change the traditional understanding of property rights. Because of that, the principles upon which they are based and the logic behind them must be disseminated and assimilated more broadly. This is a judicial evolution that has to happen in order to reduce the exacerbated social exclusion that characterized Latin American cities.

Land Lines: How has the Lincoln Institute’s Program on Latin America and the Caribbean contributed to this new vision of land policy in the region?

Sonia Rabello: The Institute has been a very important influence in clarifying land policy issues among public officials and politicians in Latin America, especially through its training programs in which participants can be exposed to such principles, concepts and ideas, exchange experiences, and build a new land policy culture. The Institute has developed a critical mass of people committed to improving the quality of land policies and promoting new strategies to finance urban development. Understanding that individual property rights can coexist with social rights to the city has been a critical factor driving the evolution of urban thinking in the region.

Mark Skidmore es profesor de Economía en la Universidad Estatal de Michigan, donde también es titular de la cátedra Morris en Finanzas y Políticas del gobierno estatal y municipal; también colabora en el Departamento de Agricultura, Economía de Alimentos y Recursos y en el Departamento de Economía. Recibió su título en Economía por la Universidad de Washington en 1987, y un doctorado en Economía por la Universidad de Colorado en 1994. Se desempeña como coeditor del Journal of Urban Affairs.

Las investigaciones del profesor Skidmore se han centrado en la economía pública y la economía urbana y regional. Sus intereses de investigación actuales son los siguientes: política tributaria del gobierno estatal y municipal, relaciones intergubernamentales, relación entre las decisiones al nivel del sector público y la actividad económica, y la economía de las catástrofes naturales. Sus trabajos han recibido el financiamiento del Programa Fulbright, el Lincoln Institute of Land Policy, la National Science Foundation, el Urban Institute y USAID.

Los artículos del profesor Skidmore han aparecido en revistas profesionales tales como Economic Inquiry, Economics Letters, Journal of Urban Economics, Kyklos, Land Economics, National Tax Journal, Public Choice, Regional Science and Urban Economics y Southern Economic Journal. Asimismo, sus investigaciones han sido objeto de citas en medios noticiosos importantes, tales como la BBC, China Post, The Economist, Europe Intelligence Wire, Forbes, International Herald Tribune, Los Angeles Business Journal, MSNBC, Newsweek, The New Yorker, The New York Times y PBS News Hour.

Land Lines: Durante este año, usted se desempeña como investigador visitante en el Instituto Lincoln. ¿Sobre qué temas está trabajando?

Mark Skidmore: Hace aproximadamente dos años, junto con mi colega Gary Sands recibimos una invitación del concejal Kenneth Cockrel de la ciudad de Detroit para evaluar el deteriorado entorno del impuesto sobre la propiedad en dicha ciudad. El concejal Cockrel se preguntaba qué ganaría Detroit si se volcara a un impuesto basado en el suelo. Nos dieron acceso a información detallada sobre más de 400.000 parcelas inmobiliarias dentro de la ciudad a fin de llevar a cabo una evaluación. En este sentido, estamos agradecidos al Instituto por el apoyo que nos brindó para realizar dicho proyecto. En nuestro informe identificamos una importante erosión de la base del impuesto sobre la propiedad y analizamos distintas opciones con el fin de expandir dicha base imponible, tal como cambiar el enfoque hacia un impuesto basado en el suelo. Nuestra evaluación mostró que un impuesto basado en el suelo serviría para ampliar la base imponible, aunque también generaría cambios significativos en las cargas fiscales de los propietarios de inmuebles residenciales, comerciales e industriales.

En el año 2013, los problemas fiscales de Detroit llegaron a un punto crítico cuando el gobernador Rick Snyder designó a un gerente financiero de emergencia, quien, a su vez, inició el proceso de declaración de quiebra. El 3 de diciembre de 2013, el juez Rhodes emitió un fallo en el que establecía que la ciudad de Detroit era elegible para recibir la protección ante quiebras establecida en el capítulo 9. A pesar del colapso casi completo del mercado inmobiliario dentro de la ciudad durante la Gran Recesión, el impuesto sobre la propiedad continúa siendo una importante fuente de ingresos y, según cómo se lo administre, puede ayudar u obstaculizar la recuperación económica y fiscal. Durante el año en curso, mi idea es utilizar los datos a nivel de parcelas para analizar algunos problemas importantes, tales como la evasión impositiva, la sobrevaluación de propiedad, el valor de terrenos vacantes y las políticas relacionadas con la transferencia de títulos de propiedad del sector privado al sector público debido a las ejecuciones fiscales y la posterior transferencia de los mismos nuevamente al sector privado.

Land Lines: ¿Cuáles son algunos de los factores subyacentes tras de los problemas actuales que enfrenta Detroit?

Mark Skidmore: Cerca del 48 por ciento de los propietarios de inmuebles en Detroit son evasores fiscales, lo que refleja la erosión del contrato social entre los ciudadanos y la ciudad. Esta tasa de evasión fiscal tan alta es el resultado de una confluencia de factores. En primer lugar, la ciudad no ha logrado hacer cumplir las obligaciones tributarias, particularmente en lo relacionado con las propiedades de bajo valor. En segundo lugar, muchos ciudadanos perciben que el impuesto es injusto debido a la sobrevaluación de sus propiedades. Finalmente, la experiencia indicaría que los ciudadanos no pagan sus impuestos porque las autoridades municipales no les brindan los servicios públicos básicos, tales como la iluminación de calles, el barrido de nieve y la seguridad pública.

Una de las causas principales de la alta tasa de evasión de impuestos es la sobrevaluación de las propiedades para fines fiscales. La crisis inmobiliaria fue particularmente grave para Detroit. En 2010, el precio de venta promedio de una parcela residencial con una estructura era de menos de US$10.000; no obstante, el valor tasado promedio de dicha propiedad para fines fiscales era de US$54.000. Según las pautas del estado, la relación entre el valor tasado y el precio de venta debería ser aproximadamente de 1:1. En septiembre de 2013, los funcionarios municipales anunciaron que, en el plazo de los 3 a 5 años siguientes, todas las propiedades de la ciudad se someterían a una revaluación.

En segundo lugar, Detroit ha tenido la costumbre de demoler estructuras deterioradas sujetas a ejecución fiscal. En consecuencia, es una de las pocas grandes ciudades de los Estados Unidos que presenta una gran cantidad de ventas de terrenos vacantes. Por lo general, resulta difícil establecer el valor de los terrenos vacantes en áreas altamente urbanizadas, aunque resulta esencial determinar valuaciones exactas si se desea imponer un tributo al suelo o un impuesto de dos niveles sobre el suelo y sobre las estructuras. La gran cantidad de operaciones de venta de terrenos vacantes en Detroit brinda una oportunidad para estimar el valor del suelo. Curiosamente, en 2010, el valor promedio de una parcela sin mejoras según los datos de venta era de US$34.000, es decir, un valor mucho mayor que el precio promedio de parcelas residenciales con estructuras, el cual, según se mencionó anteriormente, era inferior a los US$10.000.

En la actualidad, el gobierno municipal posee y administra más del 25 por ciento de la superficie del suelo de la ciudad, y la titularidad de propiedades por parte del gobierno continúa creciendo debido a que las ejecuciones fiscales han superado en rapidez a la transferencia de parcelas públicas a manos privadas. Algunas de las cuestiones que me encuentro investigando son las siguientes: ¿Cuáles son las políticas apropiadas que deben tomarse en una sociedad orientada al mercado con el fin de administrar las operaciones inmobiliarias urbanas de bajo valor? ¿Por qué es tan alta la tasa de evasión fiscal, y qué puede hacerse para mejorar el cumplimiento de las obligaciones fiscales en cuanto al impuesto sobre la propiedad en el contexto de un mercado inmobiliario urbano al borde del colapso? ¿Qué rol desempeña la percepción de valuaciones “injustas” por parte de los contribuyentes en la evasión fiscal?

Land Lines: ¿Cuál sería el pronóstico a largo plazo para Detroit?

Mark Skidmore: La problemática fiscal de la ciudad es un síntoma de problemas subyacentes más profundos. Ya sea que consideremos el redesarrollo de un área urbana en franco deterioro o la reconstrucción posterior a una catástrofe natural de grandes proporciones, los elementos más importantes en cualquier recuperación son el capital humano y los atributos sociales y culturales. Si aceptamos la premisa de que estos elementos son los factores esenciales de cualquier redesarrollo, y si dichos elementos escasean, la prioridad principal será entonces considerar la adopción de políticas y medidas que faciliten su desarrollo. En el año 2011, la tasa de graduación de la escuela secundaria en Detroit fue del 62 por ciento. El porcentaje de hogares conformados por sólo uno de los padres fue del 62 por ciento. Según algunas mediciones, la tasa de alfabetización funcional entre los adultos es de solamente el 53 por ciento. Resulta difícil construir una economía urbana dinámica y sólida sobre un fundamento tan débil.

Queda claro entonces que los encargados de elaborar políticas deben tratar los problemas fiscales inmediatos, pero el pronóstico a largo plazo para Detroit dependerá de las medidas que se tomen para mejorar la base económica subyacente, es decir, el capital humano y social. Si no se abordan estos profundos desafíos, Detroit continuará tambaleándose. No existe una solución rápida. Para que Detroit tenga una oportunidad de prosperar nuevamente, Michigan deberá comprometerse a largo plazo a mejorar dichas condiciones de fondo.

Land Lines: ¿Puede considerarse a Detroit como un indicador para otras ciudades de los EE.UU.?

Mark Skidmore: Sí y no. Otros gobiernos municipales también enfrentan problemas fiscales significativos, como Chicago, Jacksonville, Los Angeles, Oakland y Providence, por nombrar sólo algunos. Uno de los principales problemas es el de los planes de aportaciones para el futuro pago de jubilaciones sin suficientes fondos. Aun así, muchas de estas ciudades tienen una probabilidad razonable de resurgir y, posiblemente, prosperar en un futuro no muy lejano, debido a que las agudas crisis que están atravesando son un resultado de la recesión y no necesariamente de problemas fiscales crónicos. No obstante, las ciudades que presentan problemas crónicos debido a déficits importantes en su capital social y humano podrán considerar a Detroit como un indicador de su propio futuro. Espero que los encargados de elaborar las políticas estatales y municipales en todo el país puedan aprender de la experiencia de Detroit y comenzar así a realizar las inversiones a largo plazo que sean necesarias en su activo más importante -las personas y, en particular, los niños- a fin de evitar los problemas económicos y fiscales crónicos que se han observado en Detroit.

Land Lines: ¿De qué manera el proyecto de Detroit encaja en sus tareas de investigación en general?

Mark Skidmore: Una gran parte de mi investigación tiene que ver con las relaciones entre la toma de decisiones en el ámbito público y la actividad económica. Con el correr de los años he analizado cuestiones como la efectividad de las finanzas basadas en el aumento de los impuestos, las implicaciones que conlleva imponer tarifas de impacto a fin de solventar los costos de infraestructura asociados con el desarrollo, y los efectos que los impuestos sobre la propiedad, las reducciones impositivas y otros subsidios tienen sobre el desarrollo. También he estudiado otras cuestiones relacionadas con las finanzas públicas, como las loterías estatales, los impuestos a las ventas y los impuestos a las ganancias. En particular, me interesan las relaciones espaciales, dinámicas y competitivas entre jurisdicciones tributarias adyacentes y superpuestas.

Land Lines: Una gran parte de su investigación gira en torno a las políticas y finanzas gubernamentales en los Estados Unidos. ¿Qué otros trabajos ha realizado usted a nivel internacional?

Mark Skidmore: En los últimos años, recibí, junto con mis colegas de la Universidad Estatal de Michigan (MSU), una subvención financiada por la Agencia Estadounidense para el Desarrollo Internacional (USAID) en Mali. Mi tarea ha sido analizar de qué manera el sistema de gobierno recientemente descentralizado de Mali puede utilizarse en forma más efectiva en los ámbitos de seguridad de los alimentos y gestión del uso del suelo. El cambio climático afecta a Mali en formas muy tangibles: debido a que el suelo en el norte se ha vuelto más árido, se ha observado una migración significativa hacia el sur, que posee un mejor acceso al agua. Esta migración ha dado como resultado una violencia cada vez mayor debido a que los derechos de posesión y propiedad del suelo son ineficaces. Ahora que se ha reestablecido el gobierno democrático, estamos trabajando nuevamente junto con nuestros socios de Mali a fin de desarrollar sistemas que involucren a las autoridades municipales para gestionar la seguridad de los alimentos, el acceso al suelo, los derechos de propiedad y los conflictos relacionados con el suelo. Curiosamente, el problema relativo a qué hacer con todos los terrenos de propiedad pública en Detroit ha dado forma a nuestro trabajo en Mali y viceversa.

Por otro lado, actualmente también estoy investigando sobre la economía de las catástrofes naturales. En uno de mis artículos publicados recientemente (cuya autoría comparto con Hideki Toya), se utilizaron miles de catástrofes ocurridas en todo el mundo para demostrar que los países con sistemas gubernamentales más descentralizados sufren una cantidad significativamente menor de muertes por dichas catástrofes. Según nuestra investigación, existen pruebas de que los gobiernos descentralizados brindan servicios esenciales de manera más efectiva que los sistemas más centralizados.

Un tercer proyecto recientemente concluido demuestra que, en diferentes países, la confianza de la sociedad tiende a aumentar en los años posteriores a las catástrofes climáticas. La relación que observamos es sólida, por lo que podemos sugerir la hipótesis de que dichas catástrofes requieren y brindan oportunidades para que las personas trabajen salvando las barreras de las clases sociales a fin de superar sus desafíos, lo que genera confianza y capital social. Aunque las catástrofes naturales pueden tener un terrible impacto humano y económico, un posible efecto beneficioso derivado de la exposición a una catástrofe de grandes magnitudes podría ser una sociedad mucho más unida.

Land Lines: ¿De qué manera su investigación refleja los intereses y valores del Instituto Lincoln?

Mark Skidmore: El Instituto Lincoln es reconocido en todo el mundo como una organización líder en temas del uso, regulación y tributación del suelo (impuestos sobre la propiedad, reducción de impuestos, políticas de desarrollo económico y sistemas fiscales descentralizados), temas todos que son el centro de mi investigación. A lo largo de los años, el Instituto Lincoln ha apoyado mi trabajo relacionado con las finanzas basadas en el aumento de los impuestos en Wisconsin, el estrés fiscal del gobierno municipal de Michigan y mi actual investigación sobre el entorno del impuesto sobre la propiedad en Detroit. El sistema estadounidense de un gobierno nacional y varios gobiernos subnacionales en gran medida autónomos brinda un campo fértil a los investigadores que desean estudiar y aprender qué “experimentos en política” obtienen mejores o peores resultados. De verdad me encanta este trabajo y estoy agradecido por tener al Instituto como socio en mis investigaciones.

Una versión más actualizada de este artículo está disponible como parte del capítulo 3 del libro Perspectivas urbanas: Temas críticos en políticas de suelo de América Latina.

Con el objetivo de analizar la equidad y eficacia del sistema fiscal de tributación inmobiliaria, el Instituto Lincoln desarrolló, en conjunto con el Ayuntamiento de Porto Alegre (Brasil), el Seminario Internacional sobre Tributación Inmobiliaria en abril de 2001, el cual formó parte de su programa educativo en América Latina. Asistieron al seminario más de 200 delegados de 12 países, 14 estados brasileños y 45 autoridades municipales. Expertos reconocidos en el ámbito internacional, funcionarios gubernamentales y personalidades del sector académico, de finanzas públicas y de materias impositivas representaron instituciones tales como el Banco Interamericano de Desarrollo (BID), el Instituto Internacional de Tributación Inmobiliaria (IPTI), la Asociación Internacional de Funcionarios de Tasación (IAAO), la Asociación Brasileña de Secretarías de Finanzas de Capitales (ABRASF) y la Escuela de Administración Hacendaria (ESAF). En este artículo se analizan los temas y experiencias tratados en el seminario.

Así como en los Estados Unidos, en América Latina hay un debate continuo sobre la mayor eficacia, la simplificación en los procesos de administración y la menor influencia de factores políticos que derivarían de la sustitución del tributo inmobiliario por otras fuentes de ingreso, tales como recargos y tarifas. No obstante, el tributo inmobiliario continúa siendo la opción predominante de financiamiento de los servicios públicos de los gobiernos municipales de América Latina.

Una característica importante del tributo inmobiliario es la gran diversidad que hay en su administración en cada país. Por ejemplo, en Brasil, Colombia y Ecuador es un impuesto exclusivamente municipal, mientras que en Argentina es administrado por el gobierno provincial. En México, el papel de las autoridades municipales se ha reducido principalmente a la recaudación de los impuestos. En Chile, el tributo inmobiliario es una importante fuente de ingreso para los gobiernos municipales, aunque el gobierno central es el responsable por la administración de los sistemas catastrales, de tasación y recaudación. El Salvador es el único país centroamericano que no ha impuesto nunca una tributación sobre la propiedad, aunque cada vez más se discute sobre la necesidad de establecer nuevos impuestos, dado que los ingresos tributarios constituyen apenas un 11 por ciento del producto bruto interno (PIB).

Reflexiones sobre el sistema fiscal de tributación inmobiliaria

En general, el tributo inmobiliario está reconocido como un impuesto “bueno” que tiene una función esencial en el proceso de recuperación de ingresos, financiamiento de servicios públicos y promoción del desarrollo social. Su naturaleza única establece vínculos importantes entre riqueza e ingresos, desarrollo social y uso y ocupación del suelo. Sin embargo, es fundamental administrarlo con justicia para evitar ineficacias y desigualdades en la distribución de la carga impositiva. En varias sesiones del seminario se mencionó la necesidad de contar con un catastro que tenga cobertura completa y adecuada, además de los atributos básicos para la tasación de diferentes clases de propiedades. Un grupo de participantes recomendó integrar la comunidad al proceso de actualización continua de los datos catastrales, mientras que otros enfatizaron la necesidad de realizar un cuidadoso análisis de costo-beneficio antes de implementar sistemas de información geográfica.

En países donde el catastro no es administrado por el gobierno central, no existe un sistema o modelo estándar. Según el nivel de desarrollo de la municipalidad o de los recursos financieros disponibles, la tecnología catastral puede exhibir grandes variaciones, desde una simple lista de propiedades hasta un catastro multifinalitario basado en un sistema de información geográfica. También se observan diferencias en los sistemas de tasación; por ejemplo, en Colombia y Bolivia se utiliza la autotasación, mientras que en Brasil, Chile, Ecuador y México es común el método de tasación por costos. Algunas autoridades municipales de Brasil están trabajando activamente para instituir el método de comparación de ventas para la propiedad residencial. Al aplicar el método de tasación por costos, el valor del suelo se determina mediante el método de comparación de precios de venta. El valor del suelo, si se basa en la información del mercado, también se calcula de maneras diferentes, lo cual genera preocupación sobre cómo reducir las desigualdades en la tasación.

Por encima de todo, la valuación es una tarea técnica que requiere tasación uniforme, realizada a intervalos cortos, y que no debe utilizarse para fines políticos. Los sistemas que establecen límites de los aumentos impositivos entre periodos consecutivos para cada propiedad individual, hasta un ajuste general basado en la tasa de inflación anual, son vistos como una fuente principal de inequidad de tasación. Para poder ganar la aceptación del sistema tributario y la confianza de los contribuyentes, es imprescindible que haya transparencia en los resultados de las valuaciones además de características básicas tales como responsabilidad fiscal, justicia, democratización de la información y simplificación del lenguaje técnico a fin de facilitar el entendimiento de los miembros y líderes de la comunidad. Además, estos últimos deben participar en la toma de decisiones referentes a la recaudación de impuestos y gastos públicos.

Una tendencia reciente es el uso creciente de Internet por parte de los contribuyentes para recibir y pagar sus facturas impositivas, revisar los datos estadísticos de sus propiedades y actualizar la información catastral. En este particular se considera a Chile como punto de referencia en el uso de estas tecnologías en América Latina.

Experiencias con la reforma fiscal

Varios ponentes del seminario hablaron de sus experiencias con la reforma fiscal a la propiedad inmobiliaria, las cuales suelen incluir inversiones en sistemas catastrales. En Colombia, por ejemplo, la mejora en la recaudación del tributo inmobiliario se tradujo en un aumento en el porcentaje del PIB, de un 0,22 por ciento en 1970 al 0,91 por ciento en 1994. Esta mejora se atribuyó en parte a leyes que exigieron la implementación y actualización del catastro en todo el país. La fuerte oposición hacia la actualización de los valores de tasación, así como las dificultades administrativas para realizar las valuaciones, llevaron a establecer un procedimiento de autotasación. Ahora los contribuyentes son responsables por declarar el valor de tasación de sus propiedades, pero dicho valor no puede ser inferior al valor catastral registrado. Para reducir la subtasación, el valor de tasación se usa también como base para la expropiación.

Las iniciativas de reforma fiscal que hubo en Argentina durante la década de 1990 estuvieron fuertemente motivadas por las crisis financieras del sector público. El proyecto de reforma del tributo inmobiliario fue dividido en dos áreas principales: administración catastral y fiscal. A pesar de que en estas reformas se ha invertido el equivalente a más de US$120 millones, el proyecto ha sido completado en apenas un 50 por ciento de las jurisdicciones. En otro ejemplo, Mexicali, la ciudad capital de Baja California, fue la primera en adoptar un sistema basado en el valor del suelo como base impositiva predial en la década de 1990. Si bien se trató de una exitosa experiencia de reforma fiscal a la propiedad inmobiliaria, actualmente México se enfrenta a una serie de retos, entre ellos lograr un equilibrio fiscal entre el gasto público y los ingresos recaudados, además de recuperar la importancia del tributo inmobiliario como fuente de ingresos.

La tributación inmobiliaria en Brasil

Varias barreras políticas, jurídicas y prácticas han contribuido a mantener la inequidad e ineficacia del tributo inmobiliario en Brasil. Las ramas principales del gobierno (el poder ejecutivo, el legislativo y el judicial) suelen diferir en su interpretación de las regulaciones impositivas, lo cual crea una perenne falta de confianza en el sistema tributario. Entre los problemas principales que afectan el sistema fiscal de tributación inmobiliaria cabe mencionar: 1) catastros obsoletos e incompletos que derivan en pérdidas irrecuperables de los ingresos; 2) prácticas de tasación deficientes que conducen a una falta de uniformidad generalizada; 3) fuerte influencia de los valores de tasación históricos, no sólo porque los avalúos son poco frecuentes sino también porque la aprobación de cualquier nueva lista de valuación por la Cámara de Concejales suele ser difícil; y 4) deficiencias en el proceso de recaudación de impuestos.

Se reexaminó la validez y factibilidad de adoptar tasas progresivas (móviles) para el tributo inmobiliario, las cuales habían sido utilizadas ampliamente en Brasil durante la década de 1990. La idea básica había sido establecer tasas progresivas según las clases de valores de tasación e introducir un elemento de “capacidad de pago” en el sistema, en el que la carga impositiva de las propiedades más costosas fuera mayor que las de propiedades de menos valor. Si bien en 1996 la Corte Suprema declaró como inconstitucional el uso de tasas progresivas para el tributo inmobiliario, una reciente enmienda constitucional autorizó la progresividad de las tasas de tributo inmobiliario según el valor de las propiedades, así como también diferentes tasas según la ubicación de la propiedad.

Durante el transcurso del seminario, los argumentos en contra de la aplicación de tasas progresivas para el tributo inmobiliario apuntaron a la necesidad de mantener un impuesto sencillo y eficaz, mientras que aquéllos a favor de la progresividad hicieron énfasis en la concentración de la disparidad de los ingresos en Brasil y en el hecho de que los gastos de vivienda de la población pobre son proporcionalmente mayores que los de la población adinerada. La mayoría de los participantes del seminario estuvieron de acuerdo en que las tasas progresivas podrían conducir a una distribución más justa de la carga impositiva. No obstante, la progresividad debe ser gradual, es decir, se debe aplicar una tasa mayor únicamente a la parte del valor de la propiedad que excede el límite establecido en cada clase de valor de tasación, a fin de evitar grandes diferencias en la carga impositiva para aquellas propiedades cuyos valores estén ligeramente por encima o por debajo de los límites en cada categoría.

En el ámbito nacional, en Brasil es ampliamente conocida la ineficacia del tributo inmobiliario como fuente del ingreso público. Los ingresos provenientes del tributo inmobiliario representan menos del 0,4 por ciento del PIB —de hecho, la cantidad realmente recaudada es puramente simbólica en muchas partes del país. En una encuesta reciente de las municipalidades se investigaron varios aspectos del desempeño gubernamental municipal, entre ellos la evasión de impuestos. Los resultados demostraron que la evasión de impuestos es menor del 20 por ciento en apenas un 13 por ciento de las municipalidades. En una de cada cinco municipalidades, el ingreso fiscal representa menos del 20 por ciento de las propiedades incluidas en el catastro.

Nota: La divisa brasileña es el real (R$). En 1996, R$1 equivalía aproximadamente a US$1.

En la tabla 1 se muestra la importancia relativa del ingreso del tributo inmobiliario en Brasil, según el tamaño de la municipalidad. Las municipalidades pequeñas obtienen su financiamiento mayormente por transferencias de otros niveles gubernamentales, mientras que las grandes tienen una mayor dependencia del tributo inmobiliario como fuente de ingreso. Sin embargo, el funcionamiento del sistema fiscal de tributación inmobiliaria depende directamente de la voluntad política, la cual muestra grandes variaciones entre una ciudad y otra. Por ejemplo, debido a una extensa actualización de su catastro, Santana de Parnaíba, una ciudad de 60.000 habitantes en el estado de São Paulo, recauda aproximadamente R$212,00 por habitante, mientras que la recaudación promedio del tributo inmobiliario para ciudades con población similar (10.000 a 100.000 habitantes) es de R$10,04 por habitante. Las cifras de Santana de Parnaíba son incluso mejores que las de São Paulo, la capital del estado, donde se recaudan menos de R$80,00 por habitante. Igualmente, un modelo participativo en el que actúa la comunidad local y organizaciones no gubernamentales (ONG) facilita la discusión de asuntos críticos de la evaluación y administración del tributo inmobiliario, lo cual ha llevado a medidas de mejoramiento del sistema. En la ciudad Ribeirão Pires, por ejemplo, se logró aumentar el ingreso en un 40 por ciento gracias a la adopción de medidas tales como una exhaustiva revisión de la legislación del tributo inmobiliario que permitió adoptar mejores prácticas de tasación, nuevas tasas de tributo inmobiliario e implementación de procedimientos más eficaces para la recaudación de impuestos. Aún mejor: la reforma fiscal ha contribuido a incrementar la popularidad del gobierno municipal.

Caso de estudio: Porto Alegre

Inspirado por el seminario de abril y por trabajos de investigación y análisis previos, el gobierno municipal de Porto Alegre elaboró una propuesta para una reforma fiscal a la propiedad inmobiliaria con el objetivo de promover la equidad fiscal y la importancia del tributo inmobiliario como fuente de ingreso, así como también crear una administración más eficaz del impuesto. El proyecto se presentó el 28 de septiembre ante el Ayuntamiento —entidad encargada de aprobar o rechazar las medidas—, y deberá haber una decisión final antes de finalizar el año 2001.

Se encomendó el proyecto a un equipo multidisciplinario formado por miembros de la autoridad municipal, entre ellos asesores, expertos en tributo inmobiliario y planificadores urbanos y ambientales, como también un grupo de profesionales de estadística y tecnología de información de la Universidad Federal de Rio Grande do Sul. Las medidas propuestas fueron discutidas ampliamente con representantes de asociaciones públicas, líderes de la comunidad, representantes de los medios de comunicación, y, por supuesto, con los concejales (véase la tabla 2).

Conclusión

La participación de varios cientos de delegados pone en evidencia la importancia del tributo inmobiliario en sus países. Si bien es cierto que todavía hay mucho por hacer para mejorar el desempeño general de los sistemas de tributación inmobiliaria, el debate demostró que ha habido progreso en la manera como el impuesto se administra y se percibe en muchas partes del continente. Varias experiencias independientes demostraron claramente que la voluntad política es la causa principal de las diferencias observadas en los resultados del tributo inmobiliario en América Latina. Gracias a los recientes avances tecnológicos (ahora accesibles a cualquier país), se han podido poner en práctica mejores técnicas de valuación, tasación y manejo de la información. Poco a poco los retos se están desplazando de la esfera técnica a la política. Hoy más que nunca es esencial aprender a implementar las reformas y revisiones fiscales a fin de lograr sistemas de tributación inmobiliaria de mayor eficacia. También se evidencia la tendencia al uso de métodos participativos durante las revisiones, dado que es probable que la aceptación del público facilite el proceso de reforma.

Claudia M. De Cesare es consultora en tributación inmobiliaria de la Secretaría de Finanzas de la municipalidad de Porto Alegre, Brasil; investigadora e imparte clases de valuación y tributación inmobiliaria en la Universidad Federal de Rio Grande do Sul y en el Instituto Lincoln, forma parte del consejo consultivo del Instituto Internacional de Tributación Inmobiliaria (IPTI) y participa activamente en otras organizaciones profesionales.

Sidebar: Red Latinoamerica Sobre Tributación Inmobiliaria

Recientemente el Instituto Lincoln creó un grupo de redes formadas por expertos y legisladores, cuya misión es el estudio de los fundamentos de la política impositiva y del suelo en América Latina. Bajo la dirección de Martim Smolka, Senior Fellow y director del Programa para América Latina y El Caribe, la primera reunión de la red de tributación inmobiliaria se realizó durante el seminario en Porto Alegre en abril de 2001, siendo sus participantes Hector Serravalle (Argentina), Claudia M. De Cesare, Cintia E. Fernandes, Mauro Lunardi y Sol G. Pinto (Brasil), Carlos Acuña (Chile), Maria Camila Uribe y Claudia Puentes (Colombia), Mario R. Maldonado (Ecuador), Roberto Cañas (El Salvador) y Sergio Flores (México).

La red está a la búsqueda de sistemas de tributación inmobiliaria de mayor eficacia en América Latina y de reforzar la función del tributo inmobiliario en los ingresos gubernamentales municipales. Sus miembros buscan promover el desarrollo profesional, identificar temas apropiados para proyectos educativos y trabajos de investigación comparativa y diseminar información y experiencias.

Los proyectos clasificados como principales son los siguientes:

• indicadores del tributo inmobiliario
• bibliografía comentada
• base de datos de instituciones, cursos permanentes y programas educativos
• desarrollo curricular
• intercambios para el aprendizaje profesional

Si bien es cierto que algunos programas nacionales o estatales han mejorado los sistemas catastrales, los procedimientos de valuación y la comunicación en algunos países, los miembros de la red están de acuerdo en que todavía falta un largo camino para poder mejorar la eficacia y la equidad de los sistemas impositivos actuales. Los miembros también aspiran tener mayor comunicación y acceso a la información relacionada con asuntos de tributación inmobiliaria en América Latina. Los programas de capacitación futuros podrían ser una fuente de inspiración para otras municipalidades, que al igual que Porto Alegre, enfrentan dificultades en sus sistemas fiscales de tributación inmobiliaria.

The potential for sharp and unpredictable assessment increases is an important source of dissatisfaction with the property tax. Rapid price rises that are accurately and promptly reflected in assessed valuations can leave homeowners responsible for cash payments on paper gains that are unexpected, uncontrollable, and possibly short-lived. Two decades ago, this situation paved the way for adoption of California’s Proposition 13, which rejected fair market value as a basis for assessment.

Increasing valuations do not necessarily produce a corresponding rise in property tax bills, since a higher assessment base could raise equivalent revenue with a smaller tax rate. This solution is not feasible, however, when prices increase disproportionately only in particular neighborhoods or for particular types of property.

What other means are available to address price volatility and its impact on property tax rates? A number of states have recently introduced limitations on annual valuation increases. These measures avoid extreme assessment increases but may still allow assessments to match fair market values at some point in the future. They substitute a non-market value basis for assessment and diminish uniformity by distinguishing between those properties that are assessed on the basis of current values and those that are not.

Assessment Limitations in Washington and Texas

In the November 1997 elections, voters in Washington state approved a referendum generally limiting increases in assessed valuation to 15 percent a year on all classes of taxable property. If a property’s market value rises more than 60 percent, one year’s assessment may reflect no more than one-quarter of that increase. A similar measure strongly supported by business representatives was passed by the Republican legislature but vetoed by Gov. Gary Locke (D), who would have limited it to homeowners.

This case raises an important point concerning uniformity and distribution of the tax burden. Phase-in provisions ease the burden on owners of rapidly appreciating property but correspondingly increase the relative share of the tax borne by owners experiencing slower growth, or no growth, in property value. While tax limitations are generally promoted as protection for homeowners, residential benefits may pale in comparison to commercial gains.

Supporters of the Washington referendum urged passage “to soften a tax blow that could be devastating to a homeowner on a fixed income.” Yet major funding for the campaign came from industrial giants, including Microsoft, Intel, Hewlett Packard, Boeing and Weyerhaeuser. Opponents, including King County assessor Scott Noble, argued that the tax benefits “will go disproportionately to the large corporations that are bankrolling the campaign because of their much higher property values.” On the other hand, restricting such provisions to residential property introduces another level of non-uniformity to the tax.

Texas voters chose this split valuation alternative in November, approving a measure that limits increases in assessed values of residential homestead property, but not business property, to 10 percent a year. The president of the Texas Taxpayers and Research Association said this provision will “keep a terribly hot neighborhood from getting sort of a sticker shock.”

Critics saw the irony of this action. One wrote, “If the Texas Legislature had offered voters a chance to cap appraisal increases on their homes a few years ago, lawmakers would have been lauded as heroes. Angry homeowners were storming the offices of appraisal districts in the early and mid-1990s, demanding relief from double-digit increases in the appraised value of their homes and the prospect of significant property tax hikes. . . Nothing happened. Now that appraisal increases have fallen to three percent or so, the Legislature is offering voters a chance to cap the increases by changing the state Constitution. . . .” Ironically, before the price rises of the 1990s, Texas tax protests centered on whether assessments reflected falling property values quickly enough in the regional recession of the 1980s. For example, Harris County, which includes Houston, saw challenges to one-quarter of all its tax valuations in 1984 and 1985.

A Legislative Approach in Montana

Annual increases of 10 or 15 percent do not necessarily prevent assessed valuations from reaching full market levels. However, Montana lawmakers responded this year to dramatic value increases with an even more drastic measure. After studies reported that residential and commercial property values had increased by an average of 43 percent statewide since the last reassessment, the legislature required this change to be phased in at a rate of only two percent annually-taking 50 years to enter the tax rolls completely. Court challenges to this provision could raise an interesting question as to how long a phase-in period is compatible with state constitutional provisions requiring uniformity in assessment.

Assessment Reform in Ontario

Large valuation increases may be due to assessment lags as well as to price rises. One of the most startling examples of outdated tax valuation is found in Toronto-a surprise to U.S. observers who normally expect a high level of administrative efficiency from their northern neighbor. At the September conference of the International Association of Assessing Officers (IAAO) in Toronto, a panel of speakers brought together by the Lincoln Institute explored this situation. The potential for huge valuation increases stems not so much from extraordinary market activity as from extraordinary assessment inactivity. Metropolitan Toronto has not had a full-scale reassessment since1954-and that was based on 1940 market values.

Attorney Jack Walker described the public as generally supportive of current tax reform efforts, which encompass the entire province of Ontario. By contrast, a 1992 reassessment proposal for Metropolitan Toronto alone sparked such protest from residential and small business taxpayers that the proposal was abandoned. As a result, the 1997 measure explicitly addresses the concerns of many taxpayers groups. Professor David Amborski of Ryerson Polytechnic University explained that it would ensure current value assessments and regular updates. In addition, it will eliminate the business occupancy tax, permit different tax rates for different classes of property, provide special treatment for senior citizens and disabled taxpayers, and reduce taxes on agricultural and open space lands.

Thus, Toronto has also chosen to soften the impact of large assessment increases at the expense of uniformity. In this case, where municipal valuations were so out of date, the net effect may be judged an improvement in assessment equity. It will be important to evaluate the experiences of other jurisdictions struggling with the challenge of balancing uniformity and acceptability to see if they can make the same claim.

Joan Youngman is senior fellow and director of the Institute’s Program in the Taxation of Land and Buildings. An attorney specializing in property tax issues, she also writes a column for State Tax Notes, published by Tax Analysts.

Notes

Joseph Turner, “Ref. 47 Debate: Do Tax Savings Justify Change?” Takoma News-Tribune, October 23, 1997, p. A1 (quoting Rep. Brian Thomas (R-Renton))

2 Tom Brown, “Big Guns Back Property-Tax Lid,” Seattle Times, October 24, 1997, p. B3.

3Clay Robison, “Measure Would Cap Hike in Residential Appraisals,” The Houston Chronicle, November 2, 1997, p.2.

4Michele Kay, “Tax Appraisal Cap on Ballot,” Austin American-Statesman, October 20, 1997, p. A1.

Thomas A. Jaconetty is the chief deputy commissioner of the Board of Review (formerly the Board of Appeals) of Cook County, Illinois. During the past 24 years he has been involved in the disposition or review of taxes on more than 600,000 parcels of real estate. He is a member of the International Association of Assessing Officers (IAAO); the Chicago, Illinois State (ISBA) and American Bar Associations; the Justinian Society of Lawyers; and many other professional associations. He has served as a member and chair of the ISBA State and Local Taxation Section Council and contributed to the Illinois Department of Revenue’s Recodification Project.

A certified review appraiser and formerly an arbitrator for the Circuit Court of Cook County, Jaconetty has authored numerous articles and chapters for legal and taxation publications, edited three books and is working on a fourth. He has lectured at or moderated many educational programs on property taxation and assessment administration, and has published over a dozen articles on those topics. In 1998 he was appointed to the Planning Committee of the National Conference of State Tax Judges, and he served as conference chairman for the past two years.

Land Lines: How did you first become involved with the Lincoln Institute?

Thomas Jaconetty: I was familiar with the Institute’s work through its presentations at the annual conferences of the International Association of Assessing Officers (IAAO) and various other educational seminars. In 1994 the chairman of the National Conference of State Tax Judges, Ignatius MacLellan of the New Hampshire Board of Tax and Land Appeals, invited me to attend the conference after reviewing articles I had written on “Highest and Best Use” and “Valuation of Federally Subsidized Housing.” I found the experience invigorating, challenging and intellectually stimulating. The conference was and continues to be the best seminar in which I am involved each year, and I attend quite a few.

LL: As the past chairman, how do you see the role of the National Conference?

TJ: For 25 years the conference has functioned as a clearinghouse of ideas for officials exercising judicial or quasi-judicial powers over tax cases for statewide or regional jurisdictions. Noted authorities in the field, state tax court judges and officials of established tax courts are drawn together in an informal, collegial environment. The conference encourages improved decision making, the exchange of data and resources, the analysis of complex legal issues, and an avenue for a free-flowing interchange of ideas. The personal and professional relationships are open, friendly and dynamic, and there is plenty of room for divergent opinion, eclectic thought and agreement to disagree.

The Planning Committee of about 15 regular participants develops annual programs, and the rest of the members are actively involved with making presentations, offering suggestions, working on committees, attending the sessions and contributing to the overall educational experience. The annual fall conference is the most significant opportunity for formal interaction, but ongoing discussions are supported by the use of e-mail, the Lincoln Web site and the members’ professional involvement in other organizations.

LL: Why is it important for tax adjudicators to have this forum?

TJ: We are surrounded by ever-changing ideas and theories that we must balance against time-honored principles of taxation, complex economic relationships and the expectations of government. Each state has individual statutes and case law, but there is a high level of commonality among basic tax principles and a finite number of responses to factual situations. In spite of the many recurring and vexing issues that confront us, regular communication offers an opportunity to encourage consistency and consensus on the one hand and divergent opinion and reasoned dissent on the other. Members actively seek suggestions, advice and even help from their colleagues, who eagerly and generously respond.

LL: How have you seen the National Conference evolve during the years of your involvement?

TJ: Actually, there has been a remarkable level of consistency. There has been a core group of representatives from about 15 states and another dozen or so that change over time. Many members predate my involvement and others are very new. The most significant changes have been the enhanced communication offered by e-mail and the willingness of the group to probe into ethical, theoretical, decision-making and policy-based questions. There also has been a noticeable increase in volunteerism and in the number of women who are active participants.

I think there is a growing awareness that the deference given to any fact-finding agency (such as the state tax courts from whence our members come) creates a complementary responsibility to evaluate tax controversies within a framework that addresses all of the pertinent legal, valuation, philosophical and public policy issues. From all of that we hope to attain “justice,” which James Madison argued “is the end of government.”

LL: What do you see as the greatest challenges to the conference?

TJ: Remaining timely and relevant, and maintaining a cutting-edge outlook. Not every ascendant theory is always supportable or reasonable, but we seek to remain receptive, open and flexible while respecting the basic principles of state and local taxation that have stood the test of time. As issues become more complex and multi-jurisdictional, there is always a tug-of-war between local control and innovation versus national consistency and uniformity. This era of enormous budgetary constraints on state and local agencies places a premium on knowing where to go for expertise.

We face new challenges and are learning every day, and the conference presents the opportunity to encourage that growth. As John Quincy Adams said, “To furnish the means of acquiring knowledge is . . . the greatest benefit that can be conferred upon mankind.” We are also working to increase our membership and recruit more participation from states not currently represented. The optimum goal is to have around 55 to 60 active participants at any one time.

LL: What role does the Lincoln Institute play?

TJ: It is the heart and the soul of the conference. Especially in these trying economic times, without the Institute’s support many of our members would not have the local funding and financial wherewithal to attend the conference. And, without the organizing ability of the Institute staff, there would be no conference. The Lincoln Institute is uniquely qualified to create the healthy intellectual environment that brings the tax policy, legislative, academic, practitioner and administrative points of view before those very persons who decide the cases and, in so doing, “make the law.”

LL: You alluded to policy. Should judges and tax adjudicators be involved in considering public policy?

TJ: I can only suggest my own view. How judges and adjudicative bodies rule is almost inevitably a reflection of what they learn, know, believe, have proven before them, sense and comprehend, as well as what appears to be just. Everything must be taken against the backdrop of the purposes of the law and the ends that the law seeks to achieve. The more informed, eclectic, analytical and open the decision maker, the better the outcome.

The valuation of contaminated property (brownfields) and subsidized housing are two real property tax areas that immediately come to mind. These are technical issues, but they require an appreciation of the larger context and policy implications, as well as the proper balance between legislation and its interpretation.

The Lincoln Institute has had a significant and salutary impact on the development of sound tax policy. Henry George, whose writings inspire the Institute’s work, addressed these issues in The Land Question “[Taxation] must not take from individuals what rightfully belongs to individuals.” In Progress and Poverty he stated, “It is the taking by the community, for the use of the community, of that value which is the creation of the community.” But, as an exercise of power, it “must not repress industry . . . check commerce . . . [or] punish thrift . . .”

LL: What are some of the major tax issues facing tribunals today?

TJ: On the real property taxation side there is the taxation of contaminated property; the use and misuse of the cost approach; valuation of subsidized housing; the effect of low-income housing tax credited property; and the changing face of charitable and nonprofit entities. There are so many other issues: the application of traditional sales, use, gross receipts and income tax principles to an ever-expanding and global economy; related questions of nexus jurisdiction and extraterritorial power; the impact of e-commerce; the clash and interrelationship of the due process and commerce clauses; local autonomy challenged by movements to adopt model acts.

Other more general concerns include alternative dispute resolution; pro se litigants; ethics (appraiser, assessor, judicial); regulation versus deregulation; court management; and the role of policy in decision making. Added to these are the routine daily determinations that must be made by tribunals and agencies that form the grist of the taxation process, which is the lifeblood of government—that which Oliver Wendell Holmes characterized as “what we pay for civilized society.”

LL: How does the National Conference of State Tax Judges interact with other professional associations?

TJ: Many members of the conference are active at the state and local level with continuing legal education (CLE), appraisal or assessment organizations, such as seminars offered with the Appraisal Institute. Others take part in presentations sponsored by local directors of revenue or bar-related symposia on tax issues. Some sit on advisory commissions, boards, panels and task forces. Still others, including myself, have a continuing relationship with the IAAO, which offers an especially valuable and practical access to the assessment side of the real property world.

LL: Any final thoughts on the conference and its future?

TJ: Having just completed my two-year term as chairman, I hope it can be said that the conference maintained the high standards set by my immediate predecessors—Ignatius MacLellan, Joseph Small and Blaine Davis. I certainly feel that the future is in capable hands with our new chair, Arnold Aronson. With the biannual rotation of the conference to different locations around the U.S., it returns to Cambridge next year to celebrate its twenty-fifth year. I will simply echo what many of us say every year when we convene: This conference is the finest and most beneficial professional education endeavor in which any of us are engaged.

Hace más de 50 años, un proceso lento pero fundamental comenzó a transformar el impuesto sobre la propiedad en los Estados Unidos. Como este proceso se desarrolló a nivel estatal y local, y no a nivel federal, y dado que la adopción casi universal del avalúo preferencial tomó varias décadas, la mayoría de los ciudadanos no son conscientes de que los dueños de parcelas rurales a menudo reciben un tratamiento preferencial. En consecuencia, hoy millones de hectáreas de suelo rural se avalúan muy por debajo de su valor justo de mercado a efectos del impuesto local sobre la propiedad.

Estas modificaciones del impuesto sobre la propiedad comenzaron en Maryland en 1957, cuando la Asamblea General promulgó una ley de avalúo de suelos de uso agrícola. Esta ley estableció que los campos y pastizales se podían avaluar por debajo del precio del mercado, siempre y cuando se “utilizaran activamente” con fines agrícolas. Como prueba de uso agrícola activo, un dueño sólo tiene que demostrar que la propiedad generó US$2.500 o más de ingresos brutos anuales por la venta de productos agrícolas en los últimos años.

Varios factores impulsaron a docenas de gobiernos estatales a emular a Maryland y crear programas de avalúo por valor de uso (use value programs, o UVA) en las décadas de 1960 y 1970. El primero fue la expansión masiva de las regiones metropolitanas de los EE.UU. después de la Segunda Guerra Mundial, que provocó la conversión de decenas de millones de hectáreas de suelos agrícolas, ganaderos, forestales y otros suelos rurales a uso residencial y a otros usos no agrícolas. Alig et al. (2003) estima que el área desarrollada del país aumentó más del doble entre 1960 y 1997, de 10,3 a 26,5 millones de hectáreas. La rápida urbanización del suelo rural había llegado antes a Maryland que a otros estados debido a que la población de los condados de Montgomery y Prince George, cerca de la rápidamente creciente capital del país, Washington, DC, se cuadruplicó entre 1940 y 1960.

El segundo factor fue que el suelo agrícola que se encontraba al borde de las áreas metropolitanas aumentó significativamente de precio en las décadas posteriores a la guerra debido a su potencial de desarrollo inmobiliario, por lo que algunos productores rurales se vieron obligados a pagar facturas de impuestos mucho mayores debido al mayor valor de sus suelos. Entre 1950 y 1971, por ejemplo, se produjo un incremento del 330 por ciento en la relación de precios de suelos agrícolas con ingresos agrícolas netos en Maryland (Gloudemans 1974). Un estudio en dos estados y siete condados de la región de Kansas City a comienzos de la década de 1960 encontró que la proporción de ingresos brutos agrícolas absorbida por el impuesto sobre la propiedad en el condado más urbanizado era cuatro veces mayor que en la región metropolitana en su totalidad (Blase y Staub 1971). Por lo tanto, la adopción de un avalúo preferencial para el suelo rural se justificó frecuentemente como una medida política para proteger a las familias de agricultores y ganaderos de penurias económicas o, incluso, la ruina.

Una tercera razón, más sutil, de la adopción de programas UVA, tiene que ver con la manera en que el impuesto sobre la propiedad había sido administrado en muchos estados antes de 1957. Hasta ese momento en la historia de los EE.UU., los valuadores municipales y de condado habían otorgado preferencias tributarias de facto a los agricultores, a pesar de que las cláusulas constitucionales estatales exigían uniformidad y equidad en la tributación. Estas prácticas informales de avalúo tenían como objetivo proporcionar alivio tributario a “ciudadanos que se lo merecían”, pero producían como efecto secundario diferencias considerables en los avalúos de propiedades dentro de la misma comunidad.

La expansión de los programas de ayuda estatal a los gobiernos locales después de la Segunda Guerra Mundial puso al descubierto algunas de estas discrepancias. La cantidad de propiedades por residente o estudiante era frecuentemente un factor importante para determinar las fórmulas utilizadas para la asignación de subsidios estatales. Por lo tanto, creció la presión a nivel estatal para adoptar prácticas locales uniformes de avalúo, con el fin de asegurar una distribución equitativa de subsidios estatales. La eliminación de las preferencias tributarias de facto otorgadas por los valuadores a los agricultores y ganaderos dentro de sus comunidades aceleró los esfuerzos para obtener preferencias tributarias de jure para los suelos rurales, por medio de leyes estatales o enmiendas constitucionales.

California fue uno de los estados que adoptó inicialmente el avalúo por valor de uso para los suelos rurales. En 1965, el poder legislativo aprobó la Ley de Conservación de Suelos de California, comúnmente llamada la Ley Williamson. El objetivo de esta ley era la preservación del suelo rural para poder asegurar un suministro adecuado de alimentos, desalentar la conversión prematura de suelos rurales a uso urbano, y preservar las propiedades agrícolas debido a su valor como espacio abierto.

La Ley Williamson permite a condados y ciudades ofrecer un avalúo preferencial al dueño de un suelo agrícola, condicionado a un contrato que prohíbe el desarrollo del suelo por un mínimo de diez años. Después de la primera década del contrato, este se prolonga automáticamente cada año a menos que el dueño presente una notificación de no renovación de contrato. Una vez presentada esa notificación, el avalúo de la propiedad aumenta anualmente hasta que alcance su valor justo de mercado, y el contrato vence finalmente después de nueve años.

Diversidad y alcance de los programas de avalúo por valor de uso

Con poca repercusión en los medios de comunicación nacionales, el avalúo preferencial de los suelos rurales se ha convertido en una característica fundamental de los impuestos locales sobre la propiedad en los Estados Unidos. En California, por ejemplo, más de 6,7 millones de hectáreas de suelo agrícola se acogieron a los contratos de la Ley Williamson en 2008-2009. Según el Departamento de Conservación de California, las propiedades sujetas a la Ley Williamson constituían casi un tercio de todos los suelos privados a comienzos de 2009.

Más de 6,5 millones de hectáreas de suelos agrícolas en Ohio estaban inscritas en el programa de Valor de Uso Agrícola Actual (CAUV, por sus siglas en inglés) para 2007. En promedio, estos suelos se habían valuado en sólo un 14,2 por ciento de su valor de mercado. En diciembre de 2011, la Sala de Representantes de Ohio votó por unanimidad a favor de ampliar el programa CAUV del estado para incluir suelos utilizados para la producción de energía por biomasa y biodiésel.

En Nueva Hampshire, se inscribieron 1,2 millones de hectáreas en el programa estatal de avalúo por uso vigente en 2010. Estas parcelas valuadas en forma preferencial constituían más del 51 por ciento del área total de suelos del estado. Como la agricultura desempeña un papel menor en la economía de Nueva Hampshire, más del 90 por ciento de estos suelos sin desarrollar son bosques y humedales, no campos agrícolas ni pasturas.

Dado que las circunstancias económicas, políticas y legales varían sustancialmente entre los 50 estados, no es sorprendente que los gobiernos estatales hayan adoptado programas UVA diversos. En 1977, once estados ya habían creado programas en los cuales las parcelas elegibles quedaban inscritas automáticamente. En otros 38 estados, los programas requerían que los propietarios presentaran solicitudes de avalúo preferencial. Casi todos los estados ofrecían avalúos por debajo del valor de mercado para suelos agrícolas, pero sólo 21 estados extendían avalúos preferenciales para suelos madereros y bosques.

Desde el punto de vista de la conservación de suelos, la diferencia más importante entre los estados es que 15 de ellos no imponen penalizaciones si un dueño convierte su propiedad a un uso no calificado (ver figura 1). Otros siete estados exigen la devolución de un porcentaje del desarrollo inmobiliario efectuado en parcelas inscritas en el programa. Es decir, el propietario tiene que pagar al estado o al municipio un porcentaje del valor de mercado de la parcela en el año en que se desarrolla la propiedad.

Mucho más común es la penalización de reversión, un disuasión del desarrollo que exige al dueño que pague la diferencia entre el impuesto sobre la propiedad efectivamente pagado en los últimos años gracias al avalúo por valor de uso, y el impuesto que hubiera pagado en esos años si el avalúo hubiera sido efectuado al valor de mercado (más los intereses acumulados por dicha diferencia, en algunos casos). Veintiséis estados utilizan esta forma de penalización al desarrollo inmobiliario. Las investigaciones económicas han demostrado que la falta de penalizaciones al desarrollo inmobiliario debilita significativamente la capacidad de un programa UVA para demorar el desarrollo de suelos rurales que se encuentran en el borde de las regiones metropolitanas (England y Mohr 2006).

La práctica de avalúo por valor de uso a veces crea tensiones políticas en la comunidad e incluso puede dañar la legitimidad de la tributación sobre la propiedad como fuente de ingresos locales. En noviembre de 2011, una estación de televisión de Wisconsin reportó que los dueños de lotes vacantes en una subdivisión residencial de lujo habían cosechado malas hierbas en sus parcelas y solicitado con éxito un avalúo agrícola para sus lotes, mientras la construcción estaba pendiente. Este alegato hizo que por lo menos un representante estatal solicitara la realización de audiencias legislativas por abuso del programa de avalúo por valor de uso del estado. Según el representante Louis Molepske, “Esto debería molestar a todos los habitantes de Wisconsin porque han sido engañados por aquellos que… [quieren] transferir injustamente la carga de los impuestos sobre la propiedad a todos los demás” (Polcyn 2011).

Cómo salvar a los agricultores familiares y los paisajes rurales

Los programas UVA, ¿han “salvado al agricultor familiar”, como predijeron originalmente algunos de sus defensores? En realidad, no. Durante la década de 1980, la población agrícola de los Estados Unidos descendió drásticamente un 31,2 por ciento. Desde 1991 a 2007, la cantidad de granjas comerciales pequeñas continuó disminuyendo, de 1,08 millones a 802.000. En ese mismo período de tiempo, las granjas muy grandes (con 1 millón de dólares en ingresos brutos por lo menos) aumentaron su participación en la producción agrícola nacional desde casi el 28 por ciento hasta casi el 47 por ciento (Servicio de Investigación Económica del Departamento de Agricultura de los Estados Unidos, sin fecha).

Si el avalúo preferencial de los suelos rurales no ha prevenido la disminución de las actividades agrícolas familiares, ¿ha reducido la tasa de desarrollo del suelo rural en los Estados Unidos? Existen pruebas positivas al respecto, pero son modestas. Un estudio sobre el cambio en el uso del suelo desde que Nueva Jersey adoptó el avalúo por uso del suelo en 1964, hasta 1990, encontró que el programa tuvo un impacto muy modesto en la tasa de conversión de suelos agrícolas a usos urbanos (Parks y Quimio, 1996). Después de su estudio en 1998 de casi 3.000 condados de los Estados Unidos, Morris (1998) concluyó que, en promedio, los programas UVA tuvieron como resultado el mantenimiento de aproximadamente un 10 por ciento más de suelos agrícolas en un condado después de 20 años de funcionamiento del programa. Después de su estudio detallado sobre el cambio de uso del suelo en Luisiana, Polyakov y Zhang (2008) concluyeron que se hubieran desarrollado 65.000 hectáreas más de suelos agrícolas durante los cinco años posteriores a 1992 si no hubiera existido un programa UVA en el estado. Parece, entonces, que los programas UVA han ralentizado algo la expansión metropolitana durante las últimas décadas.

Transfiriendo la carga tributaria a nuestros vecinos

Si bien la reducción en la tasa de desarrollo del suelo constituye un beneficio medioambiental y público de los programas UVA, viene acompañado de un costo social. Cuando las propiedades de agricultores, ganaderos y dueños forestales reciben un avalúo muy por debajo del valor de mercado, los gobiernos locales recaudan menos impuestos, a no ser que suban la tasa de impuestos de todas las demás propiedades gravables. Al elevar las tasas tributarias para mantener los niveles de gasto público, los pueblos y condados aumentan las facturas de los impuestos sobre la propiedad de los propietarios no sujetos al UVA, que principalmente son los dueños de viviendas.

Este impacto potencialmente regresivo de los programas UVA se conocía desde hacía décadas. En su informe de 1976 sobre el avalúo preferencial de suelos agrícolas y espacios abiertos, el Consejo sobre Calidad Medioambiental del Presidente (1976, 6-8) expresó claramente que estos programas estatales tienen un costo tributario de magnitud significativa, afectando la redistribución de ingresos entre los contribuyentes:

Todas las leyes de avalúo diferencial… [generan] ‘gastos tributarios’, porque las facturas de cobro de algunos contribuyentes se reducen…. En lamayoría de los casos, el costo de esta reducción se distribuye entre todos los demás contribuyentes… El efecto de un gasto tributario es precisamente el mismo que si los contribuyentes que reciben el beneficio debieran pagar sus impuestos a la misma tasa que los contribuyentes no preferenciales, y al mismo tiempo recibieran un subsidio… por el valor del beneficio tributario.

La magnitud de esta transferencia de impuestos entre los dueños de propiedades puede ser considerable. El informe de Anderson y Griffing (2000) estima los gastos tributarios de dos condados de Nebraska asociados con el programa UVA del estado. El gasto tributario promedio es aproximadamente el 36 por ciento de los ingresos del condado de Lancaster y el 75 por ciento de los ingresos del condado de Sarpy.

Dunford y Marousek (1981) han estudiado el impacto de la Ley de Impuestos sobre Espacios Abiertos (OSTA, por sus siglas en inglés) del estado de Washington sobre la distribución de la carga tributaria en el condado de Spokane. Ocho años después de la creación del programa OSTA, se han inscrito aproximadamente 180.000 hectáreas del condado de Spokane, es decir, alrededor del 40 por ciento del área total de suelos del condado.

Los autores calculan que el aumento de impuestos de las propiedades no participantes para compensar la reducción de impuestos a los dueños de las parcelas inscritas ascendería al 1,3 por ciento, si se deseara mantener los ingresos constantes. No obstante, oculto en este cálculo promedio para el condado, se encuentran enormes diferencias entre las distintas comunidades. Aun cuando la transferencia tributaria a las propiedades no participantes sería sólo del 1-2 por ciento en muchas localidades, esta alcanzaría hasta el 21,9 por ciento en una comunidad. La conclusión de este y otros estudios es que el otorgamiento de avalúos preferenciales a los terratenientes rurales podría ayudar a retrasar el desarrollo inmobiliario de sus propiedades, pero también podría imponer una carga fiscal sobre los propietarios de viviendas así como también sobre los dueños de propiedades comerciales e industriales.

Reforma de los programas de avalúo por valor de uso

Como muchos estados han tenido casi medio siglo de experiencia con sus programas UVA, este es un buen momento para que los legisladores estatales y los departamentos tributarios hagan una pausa y se pregunten si esta característica de su sistema tributario estatal y local debería ser reformada o no. La transferencia de la carga del impuesto sobre la propiedad causada por los programas UVA en muchas comunidades sólo se puede justificar si dicha tasa tributaria preferencial sirve al más amplio interés público. El argumento a favor de la reforma cobra más impulso si se considera que el 94 por ciento de las unidades familiares agrarias tienen un patrimonio neto mayor a la mediana de todos los hogares de los Estados Unidos.

Después de la brusca caída de los mercados inmobiliarios residenciales y comerciales en 2008–2010, la tasa de conversión de suelos rurales a uso urbano disminuyó en muchos estados, al menos por el momento. Para las comunidades, puede ser más fácil considerar la adopción de reformas a los programas UVA durante este período, cuando muchos dueños de suelos rurales no tienen expectativas de vender sus propiedades a emprendedores inmobiliarios en un futuro cercano. Después de una amplia revisión de la literatura de investigación sobre los programas UVA estatales, recomiendo las siguientes reformas (England, 2011).

Aquellos estados que no imponen todavía una penalización cuando un suelo se retira del programa UVA deben comenzar a hacerlo. A menos que el propietario de suelos rurales tenga que pagar una multa en el momento en que su parcela se desarrolle, solamente se aprovechará del ahorro en el impuesto sobre la propiedad ofrecido por el programa UVA hasta que el precio de mercado del suelo desarrollado sea suficientemente atractivo. Por otro lado, la imposición de una penalización alta por hectárea, que disminuya con la cantidad de años de inscripción en el programa, podría inducir al propietario de suelos rurales a retrasar su desarrollo inmobiliario por años. Durante estos años, los fideicomisos de suelos y agencias estatales tendrían la oportunidad de imponer servidumbres de conservación sobre las parcelas rurales que merecen protección permanente contra el desarrollo inmobiliario. En una era en que pocos propietarios de suelos rurales son agricultores pobres, los programas UVA deberían ayudar a proteger los paisajes rurales y preservar los servicios de ecosistemas, en vez de subsidiar a los terratenientes ricos.

Los estados también deberían reconsiderar tres categorías de suelos rurales que son elegibles para el avalúo por valor de uso. (1) Los suelos agrícolas y ganaderos no deberían inscribirse automáticamente, como es la práctica en algunos estados. En lugar de ello, se debería obligar a los propietarios rurales a documentar los ingresos netos considerables recibidos por la venta de productos agrícolaganaderos durante el año fiscal precedente. Esto evitaría que el propietario de suelos ociosos a punto de ser desarrollados recibiera un descuento en su impuesto sobre la propiedad. (2) Las parcelas agrícolas no deberían ser elegibles para el avalúo por valor de uso si ya se presentaron planes de subdivisión o si las parcelas han sido reasignadas para uso residencial, comercial o industrial. Si existen pruebas consistentes de que un terrateniente va a comenzar pronto a desarrollar una parcela, no hay ninguna razón para continuar dándole el tratamiento tributario preferencial del programa UVA. (3) Los bosques, humedales y otras parcelas de uso no agrícola deberían ser elegibles para el avalúo por valor de uso si generan beneficios públicos tales como protección contra inundaciones, hábitat silvestre y vistas panorámicas. Por otro lado, los suelos áridos con gran potencial de desarrollo que se encuentran en el borde de las áreas metropolitanas se deberían avaluar al valor del mercado si no producen servicios de ecosistemas que beneficien a la sociedad en su conjunto.

Los estados deberían revisar cuidadosamente los métodos de capitalización de ingresos empleados para estimar el valor de uso agrícola de las propiedades rurales. Las pautas para estimar los ingresos netos de suelos agrícolas y para seleccionar la tasa de descuento que capitaliza el flujo de ingresos se debe basar en principios económicos sólidos, y se debería presentar a los contribuyentes de manera transparente. Debido a que los cálculos de capitalización de ingresos son muy sensibles a la elección de la tasa de descuento, dicha elección se debe justificar apropiadamente, y no puede tomarse arbitrariamente. En principio, la tasa de descuento libre de riesgo se tiene que ajustar según la inflación, el riesgo de incumplimiento, el riesgo de vencimiento y las restricciones de liquidez.

Los gobiernos estatales deberían reconocer que, si bien sus programas UVA generan beneficios medioambientales para el público en general, también imponen cargas fiscales sobre las localidades en que los dueños privados de suelos rurales se benefician de un avalúo preferencial. Por ejemplo, California promulgó su Ley de Subvención de Espacios Vacíos en 1972 para mitigar el impacto de la Ley Williamson sobre los presupuestos de los gobiernos locales, proporcionando subsidios estatales para reemplazar en parte los ingresos tributarios perdidos del impuesto a la propiedad. Entre 1972 y 2008, estos subsidios de Sacramento a las ciudades y condados ascendieron a 839 millones de dólares. (Estos subsidios fueron suspendidos en 2009, sin embargo, debido al enorme déficit presupuestario del estado.)

Como el avalúo preferencial del suelo rural se ha convertido en una característica fundamental del impuesto sobre la propiedad en los Estados Unidos, los gobernadores y los legisladores estatales deberían hacer una pausa y reconsiderar si estos tipos de reformas podrían mejorar tanto el desempeño de sus programas UVA como el apoyo popular a los mismos.

Sobre el autor

Richard W. England es profesor de Economía y Recursos Naturales de la Universidad de Nueva Hampshire. También es visiting fellow del Departamento de Valuación y Tributación del Instituto Lincoln.

Referencias

Alig, Ralph J., Andrew J. Plantinga, SoEun Ahn, and Jeffrey D. Kline. 2003. Land use changes involving forestry in the United States: 1952 to 1997, with projections to 2050. Technical Report. Portland, OR: U.S. Forest Service, Pacific Northwest Research Station.

Anderson, John E., and Marlon F. Griffing. 2000. Measuring use-value assessment tax expenditures. Assessment Journal (January/February): 35–47.

Blase, Melvin G., and William J. Staub. 1971. Real property taxes in the rural-urban fringe. Land Economics (May): 168–174.

Council on Environmental Quality. 1976. Untaxing open space: An evaluation of the effectiveness of differential assessment of farms and open space. Washington, DC: U.S. Government Printing Office.

Dunford, Richard W., and Douglas C. Marousek. 1981. Sub-county property tax shifts attributable to use-value assessments on farmland. Land Economics (May): 221–229.

England, Richard W. 2002. Current-use property assessment and land development: A theoretical and empirical review of development penalties. State Tax Notes, 16 December: 795.

———. 2011. Preferential assessment of rural land in the United States: A literature review and reform proposals. Working paper. Cambridge, MA: Lincoln Institute of Land Policy.

England, Richard W., and Robert D. Mohr. 2006. Land development and current use assessment. In Economics and contemporary land use policy: Development and conservation at the rural-urban fringe, ed. S.K. Swallow and R.J. Johnston. Washington, DC: Resources for the Future.

Gloudemans, Robert J. 1974. Use-value farmland assessments: Theory, practice, and impact. Chicago: International Association of Assessing Officials.

Morris, Adele C. 1998. Property tax treatment of farmland: Does tax relief delay land development? In Local government tax and land use policies in the United States, ed. Helen F. Ladd, 144–167. Cheltenham, U.K.: Edward Elgar.

Parks, Peter J., and Wilma Rose H. Quimio. 1996. Preserving agricultural land with farmland assessment: New Jersey as a case study. Agricultural and Resource Economics Review (April): 22–27.

Polcyn, Bryan. Lawmaker calls for hearing after farmland tax loophole exposed. WITI–TV, Twin Lakes, Wisconsin, 22 November 2011.

Polyakov, Maksym, and Daowei Zhang. 2008. Property tax policy and land-use change. Land Economics (August): 396–408.

USDA Economic Research Service. n.d. Washington, DC. U.S. Department of Agriculture. http://www.ers.usda.gov

Mark Skidmore is professor of economics at Michigan State University, where he holds the Morris Chair in State and Local Government Finance and Policy, with joint appointments in the department of agricultural, food and resource economics and the department of economics. He received his doctorate in economics from the University of Colorado in 1994, and his bachelor’s degree in economics from the University of Washington in 1987. He serves as coeditor of the Journal of Urban Affairs.

Professor Skidmore’s research has focused on public economics and urban/regional economics. Current research interests include state and local government tax policy, intergovernmental relations, the interrelationship between public sector decisions and economic activity, and the economics of natural disasters. His work has been funded by the Fulbright Program, the Lincoln Institute of Land Policy, the National Science Foundation, the Urban Institute, and USAID.

His articles have appeared in journals such as Economic Inquiry, Economics Letters, Journal of Urban Economics, Kyklos, Land Economics, National Tax Journal, Public Choice, Regional Science and Urban Economics, and the Southern Economic Journal. His research also has been cited in prominent news outlets such as the BBC, China Post, The Economist, Europe Intelligence Wire, Forbes, International Herald Tribune, Los Angeles Business Journal, MSNBC, Newsweek, The New Yorker, The New York Times, and PBS News Hour.

Land Lines: This year, you are a Visiting Fellow at the Lincoln Institute. What issues are you working on?

Mark Skidmore: About two years ago, my colleague Gary Sands and I were invited by City of Detroit Councilman Kenneth Cockrel to evaluate Detroit’s ailing property tax environment. Councilman Cockrel wondered what gains might result if Detroit were to shift to a land-based tax. We were given access to detailed data for more than 400,000 property parcels within the city, in order to conduct an evaluation, and we are grateful for the Institute’s support to pursue that project. Our report identified significant erosion of the property tax base and explored options for expanding the base, including a shift to a land-based tax. Our evaluation showed that a land-based tax would serve to broaden the tax base but also would produce substantial shifts in the tax burdens of residential, commercial, and industrial property owners.

In 2013, Detroit’s fiscal challenges came to a head when Governor Rick Snyder appointed an emergency financial manager who subsequently set in motion a filing for bankruptcy. On December 3, 2013, Judge Rhodes ruled that the City of Detroit is eligible for Chapter 9 bankruptcy protection. Despite the near-complete collapse of the real estate market within the city during the Great Recession, the property tax remains an important revenue source, and its administration can help or hinder economic and fiscal recovery. This year, I plan to use the parcel-level data set to examine important issues such as tax delinquency, the over-assessment of property, the value of vacant land, and policies related to transfer of property ownership from the private sector to the public sector due to tax foreclosure, and transfers back to the private sector.

Land Lines: What are some of the underlying factors behind Detroit’s current problems?

Mark Skidmore: About 48 percent of Detroit property owners are delinquent on their tax bills, a fact that reflects the erosion of the social contract between citizens and the city. This extraordinarily high delinquency rate is the result of a confluence of factors. First, the city has failed to enforce tax compliance, particularly for low-valued properties. Second, many citizens perceive the tax to be unfair because of the over-assessment of their property. Finally, anecdotal evidence suggests citizens are not paying taxes because local authorities are failing to provide basic public services such as street lighting, snow plowing, and public safety.

One key cause of the high delinquency rate is the over-assessment of property for tax purposes. The real estate crisis hit Detroit particularly hard. In 2010, the average selling price of a residential parcel with a structure was less than $10,000, yet the average assessed value of such properties for tax purposes was $54,000. According to state guidelines, the ratio of assessed value to sales price should be close to one. In September 2013, city officials announced that over the next three to five years all properties within the city would be reassessed.

Second, Detroit has a history of tearing down dilapidated tax-foreclosed structures. As a result, it is one of the few large cities in the United States with frequent sales of vacant land. The value of vacant land is often difficult to ascertain in highly urbanized areas, but accurate valuations are essential if one wants to impose a land tax or a two-tier tax on land and structures. The large number of sales transactions of vacant land in Detroit provides an opportunity to estimate land value. Interestingly, the average value of an unimproved parcel in 2010 based on sales data was $34,000—much higher than the average price of residential parcels with structures, which, as mentioned, was less than $10,000.

The city government now owns and manages more than 25 percent of the city’s land area, and public ownership continues to grow because tax foreclosures have outpaced the transfer of publicly owned parcels back into private hands. Some of the questions I am investigating are: What are the appropriate policies in a market-oriented society for managing low-valued urban land transactions? Why is the delinquency rate so high, and what can be done to improve property tax compliance in the context of a nearly collapsed urban real estate market? What role does the perception of “unfair” assessments play in tax delinquency?

Land Lines: What is the long-term prognosis for Detroit?

Mark Skidmore: The city’s fiscal challenges are a symptom of deep underlying issues. Whether one considers the redevelopment of a declining urban area or reconstruction in the wake of a major natural disaster, the most important elements in any recovery are human capital and social/cultural attributes. If one accepts the premise that they are essential building blocks for redevelopment, and if these elements are lacking, then a top priority is to consider policies and actions that can develop them. In 2011, the high school graduation rate in Detroit was 62 percent. The percentage of households headed by a single parent was 62 percent. By some measures, the functional literacy rate among adults is just 53 percent. It is difficult to build a dynamic and robust urban economy upon such a weak foundation.

Clearly, policy makers must address the immediate fiscal challenges, but the longer-term prognosis for Detroit will depend on actions aimed at improving the underlying economic base—human and social capital. Without addressing these deep challenges, Detroit will continue to flounder. There is no quick fix. In order for Detroit to have a chance to prosper once again, Michigan needs to make a long-term commitment to improving these underlying conditions.

Land Lines: Is Detroit a harbinger for other U.S. cities?

Mark Skidmore: Yes and no. A number of other local governments face significant fiscal challenges—Chicago, Jacksonville, Los Angeles, Oakland, and Providence, to name a few. Underfunded retiree compensation promises are often cited as a major issue. Yet, many of these cities stand a reasonable chance of re-emerging and potentially prospering in the not-too-distant future because they suffer from acute crises brought on by the recession, but not necessarily from chronic fiscal challenges. However, cities with chronic challenges due to significant deficits in social and human capital can look to Detroit as an indicator of their future. My hope is that state and local policy makers from around the country can learn from the Detroit experience and begin making the necessary long-term investments in their most important asset—people, particularly children— so they can avoid the chronic economic and fiscal challenges seen in Detroit.

Land Lines: How does the Detroit project fit into your larger research agenda?

Mark Skidmore: Much of my research has addressed the interrelationship between public decision making and economic activity. Over the years, I have examined issues such as the effectiveness of tax increment finance, the implications of imposing impact fees to cover the infrastructure costs associated with development, and the effects on development of property taxation, tax abatements, and other subsidies. I have also considered other public finance issues such as state lotteries, sales taxes, and income taxation. I am particularly interested in the spatial-dynamic-competitive relationships between adjacent and overlying taxing jurisdictions.

Land Lines: Much of your research has focused on government policy and finance in the United States. What other work have you done internationally?

Mark Skidmore: In recent years, I have partnered with my MSU colleagues on a USAID-funded grant in Mali. My role has been to consider how Mali’s recently decentralized governmental system can be utilized more effectively in food security and land use management. Climate change is affecting Mali in very tangible ways—as the land in the north has become more arid, there has been significant migration to areas in the south, which has better access to water. This migration is resulting in increased violence due to ineffective land tenure and property rights. Now that democratic rule has been re-established, we are again working with our Malian partners to develop systems that involve local authorities in managing food security, land access, property rights, and land-related conflicts. Interestingly, the issue of what to do with all the publicly owned land in Detroit has informed our work in Mali, and vice versa.

I also have ongoing research in the economics of natural disasters. One of my recently published articles (with coauthor Hideki Toya) used thousands of disaster events from all over the world to show that countries with more decentralized governmental systems have significantly fewer disaster-induced fatalities. Our research provides evidence that decentralized governments provide essential services more effectively than more centralized systems.

A third recently completed project shows that societal trust tends to increase in countries in the years following climatic disasters. The relationship we observe is robust, and we hypothesize that such disasters require and provide opportunities for people to work across social classes to address their challenges, thus building trust and social capital. While natural disasters can have devastating human and economic impacts, a potential spillover benefit of greater disaster exposure may be a more tightly knit society.

Land Lines: How does your research reflect the interests and values of the Lincoln Institute?

Mark Skidmore: The Lincoln Institute is recognized worldwide as a leading organization concerning the use, regulation, and taxation of land—property taxation, tax abatements, economic development policies, decentralized fiscal systems—and all of these are topics of my research. Over the years, the Institute has supported my work on Wisconsin tax increment finance, Michigan local government fiscal stress, and my ongoing evaluation of the Detroit property tax environment. The U.S. system of national and largely autonomous subnational governments provides fertile ground for researchers to study and learn about which policy “experiments” lead to better, or worse, outcomes. I really love doing this work and am thankful to have the Institute as a partner.

As part of its ongoing education program in Latin America, the Lincoln Institute, with the Porto Alegre (Brazil) City Council, organized the “International Seminar on Property Taxation” in April 2001, to discuss equity and efficiency in property tax administration. More than 200 delegates came from 12 countries, 14 Brazilian states and 45 local authorities. Internationally recognized experts and public officials in government, academia, public finance and taxation represented such institutions as the Inter-American Development Bank (IDB), the International Property Tax Institute (IPTI), the International Association of Assessing Officers (IAAO), the Brazilian Association of Secretariats of Finance of Capitals (ABRASF) and the Brazilian School of Fiscal Administration (ESAF). This article draws on the issues and experiences discussed at that seminar.

As in the United States, there is an ongoing debate in Latin America over the replacement of the property tax with alternative revenue sources, such as fees and charges, that might be easier to administer, less influenced by political factors and more efficient. Nevertheless, the property tax remains the predominant option for raising revenue to finance public services at the local government level in Latin America.

An important characteristic of the property tax is the great diversity found in its administration. For example, the property tax is a purely local tax in Brazil, Colombia and Ecuador, but it is administered at the province level of government in Argentina. In Mexico, the role of the local authorities has been reduced to primarily tax collection. In Chile, the property tax is an important revenue source for local governments, although the central government is responsible for administering the cadastral, assessment and collection systems. El Salvador is the only country in Central America that has never introduced the property tax, although currently there is strong pressure for establishing new taxes, since tax revenue represents only about 11 percent of GDP.

Insights on Property Tax Administration

In general the property tax is recognized as a ‘good tax’; its role is essential in the process of recovering revenue, funding public services and promoting social development. The unique nature of the property tax provides important links among wealth and income, social development, and land use and occupation. However, the property tax must be administered fairly to avoid inefficiency and inequity in the distribution of the tax burden. Concerns mentioned in several seminar sessions included the need for an adequate cadastre, as complete as possible in terms of coverage and containing basic attributes needed for assessing different types of properties. One discussion group recommended integrating the community in the continual process of updating cadastral data. Others emphasized the need for performing a careful cost and benefit analysis before implementing geographic information systems.

In countries where the cadastre is not administered by the central government, there is no standard model or system. Depending on the development level of the municipality and/or financial resources available, the cadastre technology can vary enormously from a simple list of properties to a cadastre based on a geographic information system with multiple purposes. Diverse valuation approaches are also observed: self-assessment is used in Colombia and Bolivia, whereas the cost approach is commonly used in Brazil, Chile, Ecuador and Mexico. Some local authorities in Brazil are engaged in a movement to use the sales comparison approach for residential property. In applying the cost approach, the land value is determined using the sales comparison approach. Although based on market information, the land value is also estimated in different ways, causing concerns over how to reduce assessment inequities.

Valuation is primarily a technical task that requires assessment uniformity and short valuation cycles, and should not be used for political purposes. Capping systems, which limit tax increases between consecutive periods for each individual property up to an overall adjustment based on annual inflation rates, are seen as a major source of assessment inequity. Transparency in the valuation results is considered fundamental for guaranteeing the taxpayers’ confidence in and acceptability of the tax system. Other basic premises include fiscal accountability, fairness, democratization of information, and translation of technical language into a form that is understandable to community members and leaders. Furthermore, community members should take part in making decisions on public revenue collection and expenditures.

A recent development of interest in this regard is the increasing use of Internet facilities by taxpayers to receive and pay tax bills, review statistical data on their property and update cadastral information. Chile is considered the benchmark in Latin America in the use of these technologies.

Experiences with Fiscal Reform

Several seminar presenters shared their experiences with property tax reform and revisions, which often include investments in cadastral systems. For instance, the improvement in the collection performance of the property tax in Colombia increased as a percentage of GDP from 0.22 percent in 1970 to 0.91 percent in 1994. This improvement was attributed in part to legislation that demanded the implementation and updating of the cadastre throughout the country. The strong pressure against updating assessed values, as well as administrative difficulties in undertaking valuations, resulted in the establishment of a self-assessment procedure. Taxpayers are now responsible for declaring the assessed value of their properties, but the value cannot be less than the recorded cadastral value. To reduce underassessment, the assessed value is also used as the basis for expropriation.

Fiscal reform initiatives in Argentina during the 1990s were strongly motivated by financial crises in the public sector. The reform project relating to the property tax was divided into two main areas, cadastres and fiscal administration. The equivalent of over US$ 120 million has been invested in these reforms, yet the project has been completed in only about 50 percent of the jurisdictions. In another example, Mexicali, the capital city of Baja California, pioneered the adoption of land value as the property tax base in the 1990s. Although this was a successful experience with property tax reform, current challenges in Mexico include achieving fiscal balance between public expenditure and revenue raised and recovering the importance of the property tax as a revenue source.

Property Taxation in Brazil

Political, legal and practical obstacles have contributed to the continuation of inequities and inefficiencies in the property tax in Brazil. Frequently there is no common interpretation of tax regulations among major branches of government (the judiciary, legislature and executive), creating a pervasive lack of confidence in the tax system. Primary concerns in property tax administration include incomplete and out-of-date cadastres, resulting in irreplaceable losses in revenue; poor assessment practices that generate a low degree of uniformity; the strong influence of historical assessed values, because valuation is infrequent and approval of a new valuation list in the Chamber of Councilors is often difficult; and low performance in tax collection.

The validity and feasibility of adopting progressive (sliding) rates for the property tax, was largely used adopted in Brazil during the 1990s, was reexamined. The basic idea had been to establish progressive rates according to classes of assessed value and to insert an element of ability-to-pay into the system, simultaneously making high-value properties pay more proportionally and alleviating the tax burden on low-value properties. In 1996, the Supreme Court declared the use of progressive rates for the property tax unconstitutional. However, a recent constitutional amendment authorized progressivity in the property tax rates based on the value of properties, as well as different rates based on property location.

Arguments expressed in the seminar against the application of progressive rates for the property tax were based on the principle of keeping the tax simple, and concerns about the measure’s effectiveness. Arguments in favor of progressivity included the concentration of income disparities in Brazil and the fact that the poor are likely to spend more proportionally in housing expenditures than are the wealthy. The majority of seminar participants believed that the progressive rates might promote a fairer distribution of the tax burden. However, progressivity should be gradual; that is, a higher rate should be applied only over the part of property value that exceeds the limit established in each class of assessed value, to avoid a large difference in tax burden for properties with values slightly above and below the boundaries of each class.

At the national level in Brazil, inefficient use of the property tax as a revenue source is widely recognized. Revenue from property taxes represents less than 0.4 percent of GDP. Indeed, the tax actually collected is only symbolic in many parts of the country. A recent survey of municipalities investigated several aspects of local government performance, including tax evasion. In only 13 percent of the municipalities was the tax evasion rate less than 20 percent. In one out of five municipalities, the revenue collected represented less than 20 percent of the properties included in the cadastre.

Table 1 demonstrates the relative importance of property tax revenue in Brazil, according to the size of the municipality. Small municipalities are financed largely by transfers from other government levels and larger municipalities are more dependent on the property tax as a revenue source. However, the performance of property tax administration depends directly on political will, which varies enormously among cities. For instance, due to an extensive updating of its cadastre, the city of Santana de Parnaíba, with 60,000 inhabitants in the State of São Paulo, collects approximately R$ 212.00 per inhabitant, while the average revenue collected from property tax for cities of its size (10,000 to 100,000 population) is R$ 10.04 per inhabitant. That performance is even better than in São Paulo, the capital of the state, which collects less than R$ 80.00 per inhabitant. Similarly, a participatory approach involving local community and nongovernmental organizations (NGOs) allows critical issues of property tax assessment and administration to be discussed, resulting in actions to improve the system. In the city of Ribeirão Pires, for example, measures that increased revenue by 40 percent included an ample review of the property tax legislation that allowed the adoption of better assessment practices, new property tax rates and more efficient procedures for tax collection. Furthermore, the tax reform has contributed to increasing the local government’s popularity.

Case Study of Porto Alegre

Inspired by the April seminar and previous research and analysis, the local government of Porto Alegre has prepared a proposal for a property tax reform aimed at increasing fiscal equity, enhancing the importance of the property tax as a revenue source, and creating more efficient administration of the tax. The project was presented on September 28 to the City Council, the entity in charge of either approving or rejecting the measures, which must be decided before the end of 2001.

A multidisciplinary team worked actively on the project, composed of local authority members, such as valuers, property tax experts, and urban and environmental planners, as well as a group of statisticians and information technology experts from the Federal University of Rio Grande do Sul. The measures being proposed have been discussed thoroughly with representatives of public associations, community leaders, the media and, of course, city councilors (See Table 2).

Conclusion

The participation of several hundred delegates at the seminar is evidence of the importance of property taxes in their countries. Although there is still an ample need for improving the overall performance of property tax systems, the debate demonstrated progress in the way the tax is administered and perceived in many parts of the region. Several independent experiences made it clear that political will is the principal element for explaining differences in the performance of property taxes in Latin America. Recent technological advances, now accessible to any country, have been able to provide better solutions in data management, valuation and assessment. Challenges are gradually moving from the technical to the political sphere. More than ever learning how to implement tax reforms and revisions is essential for pursuing more effective property tax systems. A trend toward using a participatory approach when undertaking such revisions is also evident, since public acceptance is likely to facilitate the reform process.

Claudia M. De Cesare is a property tax advisor to the Secretariat of Finance for the municipality of Porto Alegre, Brazil. She also conducts research and teaches courses on valuation and property taxation at the Federal University of Rio Grande do Sul and the Lincoln Institute. She is a member of the advisory board of the International Property Tax Institute (IPTI) and is active in other professional organizations.

Sidebar: Latin America Network On Property Taxation

The Lincoln Institute has recently formed informational networks of scholars and policy makers focused on several key issues in land and tax policy in Latin America. Led by Martim Smolka, senior fellow and director of the Lincoln Institute’s Program on Latin America and the Caribbean, the first meeting of the property taxation network took place in conjunction with the seminar in Porto Alegre in April 2001. Network rpresentatives came from Argentine (Hector Serravalle), Brazil (Claudia M. De Cesare, Cintia E. Fernandes, Mauro Lunardi and Sol G. Pinto), Chile (Carlos Acuña), Colombia (Maria Camila Uribe and Claudia Puentes), Ecuador (Mario R. Maldonado), El Salvador (Roberto Cañas) and Mexico (Sergio Flores).

The network’s mission is to pursue more effective property tax systems in Latin America and to reinforce the role of the property tax as an alternative for local government revenue. The network will promote professional development, identify relevant themes for comparative research and educational programs, and disseminate information and experiences. The members of the network have prioritized the following projects:

• property tax indicators;
• annotated bibliography;
• database on institutions, permanent courses and educational programs;
• development of curriculum; and
• exchanges for professional learning.

Although isolated initiatives at national or state levels have improved cadastral systems, valuation procedures and communication skills in some countries, the network members agree there is still great potential for improving efficiency and equity in current tax systems. The members also wanted more accessible information and better communication on property tax issues in Latin America. Innovative experiences and lessons like those cited in the following article can be shared within the group. Future educational programs may be a source of inspiration for other municipalities, like Porto Alegre, facing challenges in property tax administration.

The introduction of a market-oriented economic policy in Estonia after independence in 1991 set the stage for a plethora of reforms to restore property rights and establish a price system for goods, labor, capital and land. Land and ownership reforms had two goals: the restoration to former owners of land “unlawfully expropriated” during the Soviet regime, and the treatment of land as a valuable and scarce economic resource. As one might expect, these tasks have not been easy to accomplish, and frequent revisions in the laws and methods governing restitution and valuations have been made.

Historical Overview

Despite the far-reaching reforms taking place in Estonia today, the transformation of land ownership and the patterns of land use still reflect 55 years of history, including wars, occupation and annexation. In the first of three working papers I analyze the impact of these historical developments on land use, population structure and farm wealth in pre-Soviet Estonia. Prior to annexation to the Soviet Union in 1940, Estonia had a flourishing farm sector. Land was used mostly for agriculture, with the majority of the population residing in rural communes or municipalities.

Research also shows that a market for land was well established and reflected site specific characteristics. A distinguishing feature of this market was the coexistence of a sale-purchase price determined by the forces of supply and demand and other prices reflecting the “social” character of land use. For example, land acquisition for use by landless farmers (communal land) had a much lower price than the market price. This feature, although it may have served a social purpose, impacted the value of land for compensating former owners.

Another significant finding relates to the taxation of farms in pre-Soviet Estonia. Land and improvements on land (fixed assets) were subject to taxation, although the effective rate of taxation was quite small. This tax was a local tax with the receipts allocated to local government budgets.

Land Reform

The second paper provides a framework for the analysis of valuation formulae used by the Estonian Land and Tax Boards for the valuation of land for tax purposes. It includes a brief overview of the current land stock and land use, a discussion of land and ownership reforms, including valuation laws and methods, and a statistical analysis of the valuation model used by the Land Board.

Estonia’s experience with privatizing its economy is without a doubt at the forefront of liberalization efforts undertaken by the new independent states. The transformation of collective rights to land into individual rights took place in Estonia by means of legislation. First, the new Constitution in 1992 restored to citizens the rights of ownership of productive assets, including land, and property and land reform laws established a system for the restitution of land to former owners. Second, principles for establishing land value for compensation and privatization were spelled out by the valuation law(s).

A land market, especially for urban land, is likely to develop quickly, offering the Land Board useful information for adjusting their valuation models. Once a sufficient number of observations on land transactions becomes available, a hedonic price model or present value model can be developed to provide information on the marginal valuation of each land attribute, as well as the significance of other land characteristics not included in the current model. Using the Estonia Base Map, the spatial aspect of land and other amenities (GIS variables) may be incorporated in the model to yield good estimates of the marginal product of land in both urban and rural municipalities.

Given that land value is used as a tax base, it is incumbent upon public sector officials to assess it fairly and accurately. A land tax yield hinges on the size and distribution of the base. If the tax model neglects this, revenue will suffer and land use will be suboptimal. Economies in transition can ill afford this road.

Land Taxation and Tax Reform

The third paper integrates the two aspects of land reform, valuation and taxation, beginning with an historical overview of land taxation in Estonia leading up to the current (1995) land tax. It addresses the assignment of tax sources between the state and local governments, and the significance of land taxation as a revenue source for local governments. The paper also offers a statistical model for estimating land tax revenues based on the Estonian Land Board valuation maps, the land cadastre and tax rates selected by local municipalities and then contrasts the estimates with actual data obtained from the Estonian National Tax Board.

After independence in 1991, the Estonian government introduced a new tax system that replaced the Soviet system, and the state budget was completely “decoupled” from the USSR’s All-Union budget. On May 10, 1993, the Estonian parliament passed the Law on Land Tax as part of a reform agenda dealing with budgetary reform in general and land reform in particular. The path followed by Estonia is similar to that prescribed by the World Bank for many former Soviet republics. Guided by “western” principles of taxation, the Estonian tax system was designed to achieve efficiency in resource use as well as to meet national and local budgetary needs.

The land tax is one of several revenue sources collected from people and enterprises in Estonia. Although the land tax was established as a state tax with shared revenues between the state and local governments, it was quickly designated as a local tax with its proceeds dedicated for local budgets. Estonia also recognizes the efficiency of a special tax on land value, even though at the time of this study it accounted for only seven percent of local revenues.

Several conclusions emerge from this part of the study. First, a tax on land offers special efficiency benefits, although its implementation needs to be considered carefully. Second, for land to be a viable tax source serious attempts should be made to enhance the efficiency of financial and insurance markets, especially in rural areas. Third, land valuation should reflect two elements: the value of present attributes and the value of these attributes in the future, because a parcel of land valued at the best use of these attributes today may not capture their full value in the future.

Finally and perhaps most importantly for economies in transition, valuation and taxation of land should be viewed in the context of a “learning curve.” With the progress of the economy in general and land markets in particular, land taxation should be strengthened through annual valuation to enhance the tax capacity of municipal governments and to encourage the optimal development of land use over time.

Attiat F. Ott is professor of economics and director of the Institute for Economic Studies at Clark University in Worcester, MA. This article is adapted from three new working papers resulting from research supported by the Lincoln Institute.