Improving the Performance of the Property Tax in Latin America

The challenges of establishing a successful and sustainable property tax in Latin American countries are numerous and varied, yet many jurisdictions are implementing viable reforms. Public officials responsible for administration of the property tax in Latin America often face intense political pressure because the tax is universal and highly visible. Public dissatisfaction arises because the property tax requires payment independent of a property transaction. Moreover, equitable property tax assessment depends on a variety of factors, including operational efficiency, technical expertise, available data, administrative capacity, and political will.

In spite of these challenges and others, property taxation remains the best way to support local public expenditures for several reasons, including its familiarity to taxpayers, its progressive quality relative to taxes on consumption, and the difficulty of evasion. This report presents a comprehensive framework that could help overcome many of the traditional roadblocks to successful property tax collection in Latin America. Recommended reforms focus on three areas: fiscal policy, tax policies, and assessment practices and collection procedures.