Here’s why growing cities should tax land to pay for essential services

A family living in the Makoko slum, Lagos.

Africa is urbanising at an unprecedented rate. The continent’s urban areas are already home to over 427m people – but this number is expected to double in the next 25 years.

People moving from rural areas into the cities expect better public services and infrastructure. And yet, many municipal authorities lack the capacity to provide these.

Part of the problem is that city authorities are constrained in their ability to collect taxes at a local level. In developing countries, local taxation raises only around 2 per cent of GDP, as opposed to 6 per cent in the developed world.

The result is local authorities remain overly reliant on transfers from central governments. These are constrained in a number of ways and tend to be both unreliable and insufficient to support city growth.

Citizens of underfunded cities are at risk of not receiving basic services, including water, housing, electricity, and healthcare. Large, sprawling informal settlements emerge, which can spawn health risks and constrain incomes.

Local authorities can become better at raising their own revenues. The most obvious way for them to do this is through taxing land, still a major untapped source of revenue.

Economists have long argued that land taxes are the best source of revenue for funding cities’ growth. However, most land remains untaxed in the developing world – in part because imposing new taxes means going up against vested interests. When there is no land tax in place, private owners of land reap the gains from growth of and investments in a city without having to pay for them. They are likely to lobby hard against the introduction of taxes that enable the gains to be shared by all.

City authorities are legitimate only to the extent that they represent this wider interest. Otherwise, rapid urban growth, without increased public investment, will result in numerous social and environmental problems.

Another challenge to implementing these types of taxes is unclear ownership structures that often lead to overlapping claims on land. Administrative reforms and technological improvements that formalise land rights not only provide the basis for taxation, but remove uncertainty that discourages investment. Such reforms, such as updating and digitalising the land registry, can also encourage more efficient and effective tax collection at the local level.

It is only fair that, as a government invests in infrastructure and services in a growing city, it should get some benefit from the commensurate increase in land and property values in that city. It is in the wider public interest for the government to see a return on its investment, which it can then re-invest in other areas.

With good citizen communication, city authorities can gain majority support to tax land. Otherwise they risk continuing to under-provide provide the adequate services and infrastructure their cities need to become productive places that support economic growth.

Our new brief Financing fast-growing cities looks at taxing land and other practical policies for city authorities to raise much needed revenue.

Paul Collier is a professor at the University of Oxford and the director of the International Growth Centre. Astrid R.N. Haas is senior country economist at the International Growth Centre.


The IPPC report on the melting ice caps makes for terrifying reading

A Greeland iceberg, 2007. Image: Getty.

Earlier this year, the Intergovernmental Panel on Climate Change (IPCC) – the UN body responsible for communicating the science of climate breakdown – released its long-awaited Special Report on the Ocean and Cryosphere in a Changing Climate.

Based on almost 7,000 peer-reviewed research articles, the report is a cutting-edge crash course in how human-caused climate breakdown is changing our ice and oceans and what it means for humanity and the living planet. In a nutshell, the news isn’t good.

Cryosphere in decline

Most of us rarely come into contact with the cryosphere, but it is a critical part of our climate system. The term refers to the frozen parts of our planet – the great ice sheets of Greenland and Antarctica, the icebergs that break off and drift in the oceans, the glaciers on our high mountain ranges, our winter snow, the ice on lakes and the polar oceans, and the frozen ground in much of the Arctic landscape called permafrost.

The cryosphere is shrinking. Snow cover is reducing, glaciers and ice sheets are melting and permafrost is thawing. We’ve known this for most of my 25-year career, but the report highlights that melting is accelerating, with potentially disastrous consequences for humanity and marine and high mountain ecosystems.

At the moment, we’re on track to lose more than half of all the permafrost by the end of the century. Thousands of roads and buildings sit on this frozen soil – and their foundations are slowly transitioning to mud. Permafrost also stores almost twice the amount of carbon as is present in the atmosphere. While increased plant growth may be able to offset some of the release of carbon from newly thawed soils, much will be released to the atmosphere, significantly accelerating the pace of global heating.

Sea ice is declining rapidly, and an ice-free Arctic ocean will become a regular summer occurrence as things stand. Indigenous peoples who live in the Arctic are already having to change how they hunt and travel, and some coastal communities are already planning for relocation. Populations of seals, walruses, polar bears, whales and other mammals and sea birds who depend on the ice may crash if sea ice is regularly absent. And as water in its bright-white solid form is much more effective at reflecting heat from the sun, its rapid loss is also accelerating global heating.

Glaciers are also melting. If emissions continue on their current trajectory, smaller glaciers will shrink by more than 80 per cent by the end of the century. This retreat will place increasing strain on the hundreds of millions of people globally who rely on glaciers for water, agriculture, and power. Dangerous landslides, avalanches, rockfalls and floods will become increasingly normal in mountain areas.

Rising oceans, rising problems

All this melting ice means that sea levels are rising. While seas rose globally by around 15cm during the 20th century, they’re now rising more than twice as fast –- and this rate is accelerating.

Thanks to research from myself and others, we now better understand how Antarctica and Greenland’s ice sheets interact with the oceans. As a result, the latest report has upgraded its long-term estimates for how much sea level is expected to rise. Uncertainties still remain, but we’re headed for a rise of between 60 and 110cm by 2100.

Of course, sea level isn’t static. Intense rainfall and cyclones – themselves exacerbated by climate breakdown – can cause water to surge metres above the normal level. The IPCC’s report is very clear: these extreme storm surges we used to expect once per century will now be expected every year by mid-century. In addition to rapidly curbing emissions, we must invest millions to protect at-risk coastal and low-lying areas from flooding and loss of life.

Ocean ecosystems

Up to now, the ocean has taken up more than 90 per cent of the excess heat in the global climate system. Warming to date has already reduced the mixing between water layers and, as a consequence, has reduced the supply of oxygen and nutrients for marine life. By 2100 the ocean will take up five to seven times more heat than it has done in the past 50 years if we don’t change our emissions trajectory. Marine heatwaves are also projected to be more intense, last longer and occur 50 times more often. To top it off, the ocean is becoming more acidic as it continues to absorb a proportion of the carbon dioxide we emit.

Collectively, these pressures place marine life across the globe under unprecedented threat. Some species may move to new waters, but others less able to adapt will decline or even die out. This could cause major problems for communities that depend on local seafood. As it stands, coral reefs – beautiful ecosystems that support thousands of species – will be nearly totally wiped out by the end of the century.

Between the lines

While the document makes some striking statements, it is actually relatively conservative with its conclusions – perhaps because it had to be approved by the 195 nations that ratify the IPCC’s reports. Right now, I would expect that sea level rise and ice melt will occur faster than the report predicts. Ten years ago, I might have said the opposite. But the latest science is painting an increasingly grave picture for the future of our oceans and cryosphere – particularly if we carry on with “business as usual”.

The difference between 1.5°C and 2°C of heating is especially important for the icy poles, which warm much faster than the global average. At 1.5°C of warming, the probability of an ice-free September in the Arctic ocean is one in 100. But at 2°C, we’d expect to see this happening about one-third of the time. Rising sea levels, ocean warming and acidification, melting glaciers, and permafrost also will also happen faster – and with it, the risks to humanity and the living planet increase. It’s up to us and the leaders we choose to stem the rising tide of climate and ecological breakdown.

Mark Brandon, Professor of Polar Oceanography, The Open University.

This article is republished from The Conversation under a Creative Commons license. Read the original article.