ICTD Senior Fellow Mick Moore made a case for why, in the context of Sri Lanka, property taxes are “by far” the “best taxes available” despite being underutilized, during a pre-budget forum hosted by local independent think tank Verité Research.
“[Property tax is] an excellent case of a tax that should be collected at the moment but isn’t because we don’t have a system of doing it,” Moore said during his brief presentation as one of “10 innovative proposals for economic recovery”. He noted how property taxes currently account for only about 1 per cent of total government revenue.
Asked about its redistributive aspect, ICTD’s founding CEO said property taxes are “almost by definition going to be progressive” as wealthier people tend to have more property.
Moore acknowledged the government’s commitment to raise taxes on wealth, which, he said, is an “extremely difficult” task given the limited information available on the matter in the country. Thus “we should reduce or refine that objective into taxing property … specifically real estate.”
He further argued that given recent technological changes – for instance, the availability of GPS and satellite imagery – the possibility of raising property taxes has “transformed” in the last couple of years.
“Any government that wants to set-up a significant, remunerative and fair property tax system now can take advantage of possibilities that weren’t there a few years ago,” he added.
Moore has been a specialist on Sri Lanka for almost 50 years. Among the work he has done include ICTD Working Paper 65, published in 2017, which looked into the long-term revenue decline in the country even before the economic crisis came to a head in May 2022 when Sri Lanka defaulted on its national debt.
His more recent work include research published in 2023 that proposes alternative measures that are more “feasible and effective” in increasing the country’s tax revenue, as opposed to the government’s intended universal tax registration strategy.
Click here to see more of ICTD’s work on Sri Lanka.