The Optimal Reform About Property Tax

We present the desirable tax reform on the property tax on land and housing in Japan. Since the property tax on housing, building, and equipment becomes an obstacle to the capital formation on land, it should be abolished. Conversely, the effective rate of property tax on land should be increased so as to attain the revenue neutrality for local government. The abolition of tax on housing induces the higher land price which can bear the increase in the property tax on land, so that such a tax reform would benefit all individuals.