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Immovable Property Taxation for Sustainable and Inclusive Growth

Author

Listed:
  • Alexander Leodolter
  • Savina Princen
  • Aleksander Rutkowski

Abstract

A well-designed recurrent tax on residential property (RRPT) can be an important element of the tax mix being able to foster growth, address policy issues related to inequality and contribute to the green transition. Nevertheless, tax revenues from recurrent property taxes are low in EU Member States. The paper first examines the design of efficient property taxation, which also includes removing the homeownership bias in taxation. Subsequently, it provides an overview of RRPT policies in EU Member States and discusses the political economy of property tax reforms. Finally, potential RRPT reforms to reduce inequality and support environmental goals are explored. An RRPT with a progressive rate schedule and a regularly updated tax base factoring in the energy performance of the building is able to support growth, reduce income inequality and contribute to a sustainable environment.

Suggested Citation

  • Alexander Leodolter & Savina Princen & Aleksander Rutkowski, 2022. "Immovable Property Taxation for Sustainable and Inclusive Growth," European Economy - Discussion Papers 156, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    • Handle: RePEc:euf:dispap:156
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    More about this item

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D3 - Microeconomics - - Distribution
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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