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Implementing a Local Property Tax Where There Is No Real Estate Market

The Case of Commonly Owned Land in Rural South Africa

Michael E. Bell and John H. Bowman

April 2006, English

Lincoln Institute of Land Policy


Since 1995 the authors have worked on a series of property taxation projects in South Africa, funded in part by the Lincoln Institute of Land Policy. South Africa envisions extending value-based property taxation, long established in white urban areas, into rural areas and former black local authority areas. Special problems arise in rural tribal areas, however, where continued traditional communal land ownership means property markets will not develop to provide values.

This report summarizes what was learned from a workshop held in a tribal area of Limpopo Province, which sought to assist local residents in identifying land attributes that affect the relative desirability of different plots, and to apply those criteria to selected plots as a step toward developing taxable values that are reasonable proxies for market value. Although the focus here is on South Africa, the approach and lessons learned have broader applications in other developing and transitional countries where a modern, mature property tax based on market values is not feasible.

About the Authors

Michael E. Bell is president of MEB Associates, Inc. and executive director of the Coalition for Effective Local Democracy, both based in Maryland. He is also a research professor at the George Washington University Institute for Public Policy.

John H. Bowman is professor emeritus in the Department of Economics at Virginia Commonwealth University in Richmond and a consultant on government finance.


Keywords

Land Value, Land Value Taxation, Property Taxation, Taxation, Valuation, Value-Based Taxes