The effect of property tax on wealth accumulation in developing economies

Abstract

Wealth accumulation aids in the survival and betterment of disadvantaged households. The majority of African households acquire wealth in the form of properties, which form part of their assets. This study aims to investigate the effect of property tax on wealth accumulation. From 1990 through 2019, the study looks at seven African countries: Cameroon, Eswatini, Madagascar, Mauritius, Morocco, South Africa, and Tunisia. The panel vector error correction model (PVECM) was employed as the econometric technique approach. The variables used in the study are property tax, land wealth, political stability, education, and household income. The findings show that property taxes have a positive and significant relationship with wealth accumulation in the long-run in the seven African countries studied. In the short-run, however, the relationship is negative and statistically insignificant. The study recommends a policy review on land ownership to attain easily landed properties and a reduction in property tax.