Municipalities need recurrent property taxes to finance service delivery
The ability for cities to raise revenues in a non-distortionary way for effective urban service delivery and infrastructure is essential to realizing the potential of urbanization. As most benefits from these investments will be capitalized in surging land values, recurrent taxes on land and other real property can be an incentive-compatible financing method. In developing countries, taxes on land and property are still far below those of developed countries, even in relative terms. Instead, cities often rely heavily on land transaction taxes, but these impose frictions on land market operations, push transactions into informality, and create incentives for fraudulent under-declaration of sales values.
Municipalities need recurrent property taxes to finance service delivery
As the world urbanizes rapidly, – it is estimated that only 1.5% of the world’s land is home to about half of global production.
Such economic concentration is a built-in feature of human settlement development and a key driver of growth. However, while some countries have succeeded in spreading economic benefits to most of their citizens, many other countries have not.
Especially outside the economic centers that concentrate production, there are “lagging areas” with persistent disparities in living standards and a lack of access to basic services and economic opportunities.
Over one billion people live in underserved slums with many disparities from the rest of the city in terms of access to infrastructure and services, tenure security, and vulnerability to disaster risk. A further one billion people live in underdeveloped areas with few job opportunities and public services.
How can countries address the division between the leading and lagging regions?
As discussed at the Ninth Session of the World Urban Forum (WUF9) in Kuala Lumpur, Malaysia,
This is true even in Africa, where the most studies have been published, due to shortcomings in both the quality and quantity of research on these questions.
As UN-Habitat’s Charter of Public Space states, public spaces are a key element of individual and social well-being, the places of a community’s collective life, particularly in situations of poverty and limited public resources, such as those in the developing countries. The Charter also highlights that participation of citizens and in particular of communities of residents is of crucial importance for the maintenance and management of public spaces. While there might be no objection to this statement, it is also true that it has been easily overlooked, especially in developing countries, for the sake of “economic efficiency.”
[Put together the puzzle pieces to reveal the picture. Scroll down to #9 for hints.]
Hurricanes Harvey, Irma, and Maria that pounded coastal United States and the Caribbean; the severe drought that struck Somalia; forest fires that are ravaging through southern California… Hard to miss were the natural disasters that displaced – even killed – individuals and families.
There were also the “manmade” disasters – conflicts that erupted or lasted in many parts of the world continued to force men, women, and children out of their homes and homelands.
Yet, turning to the bright side,
Just a couple of weeks ago, for example, global and local leaders gathered at the One Planet Summit in Paris to firm up their commitment – and ramp up action – to maximize climate finance for a low-carbon, disaster-resilient future.
At the World Bank, our teams working on social development, urban development, disaster risk management, and land issues have endeavored with countries and cities worldwide throughout the year to achieve a common goal: building inclusive, resilient, and sustainable cities and communities for all.
How did they do? From our “Sustainable Communities” newsletter,
#1: Africa’s Cities: Opening Doors to the World
Released in February 2017, our report on cities in Africa notes that, to grow economically as they are growing in size, Africa’s cities must open their doors and connect to the world. Improving conditions for people and businesses in African cities is the key to accelerating economic growth, adding jobs, and improving city competitiveness. Two more reports released in 2017 also shined a light on inclusive urban growth in East Asia and the Pacific and in Europe and Central Asia respectively.
- natural disasters
- Sustainable Communities
- disaster risk management
- Migration and Remittances
- Labor and Social Protection
- Information and Communication Technologies
- Climate Change
- Urban Development
- Social Development
- The World Region
- East Asia and Pacific
Written laws often fall short of adequately protecting women’s tenure rights; while in some countries, formal national laws explicitly discriminate against women.
On March 8, 2016, on the occasion of International Women’s Day, Habitat for Humanity International launched its first global advocacy campaign, “Solid Ground,” which envisions a world where everyone has access to land for shelter. Promoting gender equality and addressing inequitable or unenforced laws, policies, and customary practices affecting women’s rights to security of tenure and inheritance, has been a primary focus of the campaign.
Now mid-way through the campaign, Solid Ground has grown to include 37 national Habitat for Humanity organizations, 17 partner organizations, an active microsite solidgroundcampaign.org (and in Spanish, SueloUrbano.org), and has provided direct financial assistance to country programs working on gender and land issues. In its first year, over 1.3 million people are projected to have improved access to land for shelter through the Solid Ground campaign with a goal of reaching 10 million people, especially women.
Through a variety of efforts to build capacity, mobilize allies, influence policymakers, and work together with our partners, A sampling of some strategies, cases, and upcoming plans are highlighted below.
Global positioning systems (GPS), real time traffic maps, accurate weather forecasts, Uber, self-driving cars…
“Geospatial,” or location-based data has existed for hundreds of years – for example, in street and topographical maps. What’s different is how quickly new information is being gathered and the more sophisticated analytics that is being applied to it, thanks to technological advances.
What was once information only found in the domain of government, military, and select private sector, even up to the 1980s and 90s, has come into broad use over the last 20 years.
This summer, some tens of millions of people in the U.S. traveled to see the total solar eclipse, including a co-author of this blog. Not only was the eclipse amazing – but the drive back from Tennessee to Washington, D.C. showed the integration and impact of geospatial information in our daily lives.
Much of this has to do with the lack of adequate infrastructure that can defend against the impacts of floods, sea level rise, landslides or earthquakes. . But even when cities know what it takes to become more resilient, most often they do not have access to the necessary funding to realize this vision.
It is estimated that worldwide, investments of more than $4 trillion per year in urban infrastructure will be needed merely to keep pace with expected economic growth, and an additional $1 trillion will be needed to make this urban infrastructure climate resilient. It is clear that the public sector alone, including development finance institutions like the World Bank, will not be able to generate these amounts—not by a long stretch.
The recent series of devastating hurricanes in the Caribbean has reminded the world, once again, that natural disasters are not equal-opportunity destroyers. The economically marginalized and those lacking secure land and property rights are often disproportionately affected for at least three reasons:
- First, without secure property rights, they typically lack the long-term incentive and access to credit to build safe, resilient houses.
- Second, they can be reluctant to flee their homes to safe areas, fearing they won’t be allowed to return.
- Finally, they are less likely to be the recipients of government risk mitigation or recovery efforts. Government recovery efforts – no matter how well intentioned – rarely reach those most in need. After the floods and landslides in Nepal in 2011, for example, only 6% of the poorest received government support – compared to almost 90% of the well off.
The increasing frequency of natural disasters with tragic human consequences should also serve as reminders that resources spent on disaster risk reduction (DRR) are much more effective at saving lives and property loss. Yes, despite substantial evidence that reducing disaster risk is more cost-effective than responding to disasters, expenditures for disaster response and reconstruction exceed spending on disaster risk reduction and preparedness at a rate of about 20 to 1.
To overcome that spending gap will require innovative thinking on a time-tested idea. Governments, the World Bank, and other donors are doing the right thing when trying to devote more resources to disaster risk reduction – and to make land and property rights reforms part of a multi-faceted DRR strategy. In doing so, they would do even better by recognizing that those rights exist in three dimensions, encompassing not just the ground beneath our feet but to the space above (and below) it.
But, what happens when the palm tree is cut or when the street vendor changes the location?
The absence of street names poses not only challenges for orientation, but also for property tax collection, postal services, emergency services, and the private sector. Especially, new economy companies, such as Amazon or Uber, depend on street addressing systems and are eager to cater to market demands of a growing middle class.
To address these challenges, the Accra Metropolitan Assembly (AMA), financed by the World Bank’s second Land Administration Project , is implementing a street addressing and property numbering system in Accra. Other Metropolitan areas received funding from other World Bank-funded projects for similar purposes.