Property taxation and economic development: lessons from Rwanda and Ethiopia

TITLE: Property Taxation and Economic Development: Lessons from Rwanda and Ethiopia

AUTHOR: Goodfellow T

YEAR: 2016

ABSTRACT: This SPERI Brief explores the challenges, opportunities and pitfalls of property taxation, and how it relates to land ownership, through analysis of Rwanda and Ethiopia: two rapidly urbanising countries whose recent economic growth and poverty reduction has been more consistent than others in Africa.

It argues that:

  • Contemporary rapid urbanisation and the concentration of capital in urban property underscore the need for states to develop effective property taxation and mechanisms to capture rising land and property values.
  • Introducing such mechanisms and taxes is extremely challenging. States' ability to do so is determined by multiple factors including: historic property tax and land leasing systems, and how they interact; the concerns of politicians to maintain popular support and prevent resistance to reforms; and the desire to continue to attract investment from investors, both domestic and from diaspora groups, many of which have invested heavily in urban property in recent decades.