The Political Economy of Progressive Property Tax Reform: Evidence from Pakistan

This project focuses on two distinct but related components of work: The first component focuses on the political economy of progressive property tax reform. It seeks to understand why governments struggle to reform regressive and under-utilised property tax regimes in developing countries. It analyses this question in the Pakistani context by mapping the preferences of local politicians and voters about the tax schedule and analysing local politicians’ responsiveness to the preferences of different groups of citizens. It also analyses whether citizen and politician support for regressive tax policy is due to misinformation and whether local politicians are responsive to new information about the true preferences of citizens. The second component empirically tests the relative efficacy of different models for mass property valuation (that determine a statistical or points-based prediction of property values based on observable characteristics) in terms of performance, cost-effectiveness and tax equity. It is motivated by a recognition that property tax remains one of the most underutilized taxes in developing countries, partly because states lack the capacity to institutionalize effective methodologies of property valuation.

Project Location: Punjab, Pakistan