In this paper, we review the practice of property taxation in developing and transition countries, and use this history to suggest a roadmap for reform. We begin with a discussion of the conventional wisdom about the advantages of using the property tax, and of the reasons why this conventional wisdom does not necessarily travel well to the developing country setting.
This discussion is important to understanding the constraints to successful reform. Next we explore the variation in the revenue performance and look for patterns that might explain why some countries do better than others. Then we turn to the practice: the rate and base structures, and the administrative practice. We conclude with a discussion of “best practices” and how these might move the property tax closer to realizing its revenue potential.