ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Fiscal and Distributional Implications of Property Tax Reforms in Indian Cities

The property tax is an important local revenue source in many countries, but is often underused as a source for financing local expenditures. This paper examines the fiscal and distributional implication of ongoing and potential assessment reforms in two Indian cities, Bangalore and Pune. While our findings are specific to these two cases, the reform efforts and underlying problems are representative of most urban local governments. Reform efforts that bring assessment of the property tax base closer to market values have significant positive impacts on revenue generation and do not have adverse consequences in terms of the tax burden faced by the poor. While current assessment reforms are a good first step, structural issues such as improved valuation, increasing buoyancy of the tax, and building taxpayer confidence need to be addressed to make these reforms sustainable.

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