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Property Tax and Property Values: Evidence from the 2012 Italian Tax Reform

Tommaso Oliviero and Annalisa Scognamiglio ()

CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy

Abstract: This paper assesses the extent to which property taxes are capitalized into property values, exploiting the 2012 Italian tax reform. Municipal-level variation in the level of the property tax rates is instrumented using the exogenous staggered timing of local elections. We show that the incumbent local governments with upcoming elections in 2013 shifted the composition of fiscal revenues towards lower property tax. Our 2SLS estimate shows that a one standard deviation increase in municipal-level property tax intensity leads to a 2.7% reduction of municipal property values in the year of the reform. We elicit information on the characteristics of the compliers and show that these municipalities feature inefficient public spending and low social capital. JEL Classification:

Keywords: Real estate values; Property tax capitalization; Political budget cycle. (search for similar items in EconPapers)
JEL-codes: D72 G12 H20 R32 (search for similar items in EconPapers)
Date: 2016-04-16, Revised 2018-03-12
New Economics Papers: this item is included in nep-acc, nep-law, nep-pbe, nep-pub and nep-ure
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Published in European Economic Review, 2019, vol.118, pp. 227 - 251

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http://www.csef.it/WP/wp439.pdf (application/pdf)

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Journal Article: Property tax and property values: Evidence from the 2012 Italian tax reform (2019) Downloads
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