PhD Defence: Aristide Tiemele Affroumou

Tiemele Aristide Affroumou
CERDI, Université Clermont Auvergne

Examiners

Antonio Savoia, University of Manchester
Gervasio Semedo, Université de Tours
Jules Tapsoba Sampawende, AfreximBank Group
Zié Ballo, Université Félix HouphouëtUniversité Félix Houphouët Boigny Boigny
Mary-Françoise Renard, Université Clermont Auvergne, CERDI, Supervisor

Abstract

Domestic revenue mobilization is currently considered one of the most potent tools for financing development in developing countries. Moreover, it is recognized that domestic revenues can contribute significantly to achieving the 2030 Agenda Sustainable Development Goals (SDGs). The question then is which national fiscal instruments governments can rely on to finance their economies. From this perspective, many practitioners and researchers have argued that property taxation, long neglected, can play an essential role in increasing domestic revenues.

The aim of this thesis is twofold. First, it seeks to revisit the main determinants of property taxation identified in the literature and explore the mechanisms through which these factors can influence the collection of property tax revenues. Second, it provides insight into specific institutional factors affecting property tax collection in Sub-Saharan Africa. On the whole, the thesis assesses how property taxation can contribute to the overall mobilization of tax revenues.

The thesis findings thereby contribute to a deeper understanding of property taxation policies in developing countries. The thesis is divided into two parts, comprising a total of six chapters, including an introductory chapter. The first part, which includes Chapters 2, 3, and 4, provides an in-depth immersion in the literature on the main determinants of property tax revenues. The second part, encompassing Chapters 5 and 6, focuses on Sub-Saharan Africa and examines specific institutional factors influencing property tax revenue mobilization in these countries.

Chapter 2 investigates the causal relationship between property tax revenue, income inequality, and urbanization in a panel of 115 developing and developed countries from 2000 to 2018. The results reveal a mixed picture across developing and developed countries. In both groups, the findings indicate that urbanization Granger-causes an increase in property tax revenue, with a unidirectional relationship observed in developing countries. In developed countries, however, there is a positive bidirectional causality between urbanization and property tax revenues. Additionally, the chapter finds that urbanization reduces income inequality in both developed and developing countries, with unidirectional causality. When examining the full sample, the findings demonstrate bidirectional causality between property tax revenue and income inequality, as well as positive unidirectional effects of urbanization on property tax revenues. More specifically, the findings highlight a negative effect of income inequality on property tax revenues. Conversely, we find that property taxation increases income inequality. Finally, the analysis of impulse responses reveals distinct dynamics between developing and developed countries while confirming previous findings.

Chapter 3 examines the relationship between urbanization and property tax revenues among 71 developing countries over the period 1996-2019. The results show that urbanization positively and significantly impacts property tax revenue mobilization. This positive association can be attributed to urban expansion, which creates new land opportunities and increases the taxable base for property tax revenue collection. The findings survive after a battery of tests, reflecting a clear positive impact of urbanization on property tax revenue mobilization. Furthermore, we provide some evidence that digitization and financial development are effective transmission channels through which urbanization may influence property tax revenue mobilization in developing countries.

Chapter 4 reevaluates the impact of Fiscal Decentralization (FD) on property tax revenues in a sample of 42 developed and developing countries for the period 2005-2019. Our findings reveal a robust positive effect of fiscal decentralization on property tax revenues. Additionally, we found that a higher level of democracy enhances this positive relationship. However, our analysis indicates that a higher level of corruption can undermine the beneficial impact of fiscal decentralization on property tax revenues. The chapter also demonstrates that lower levels of ethnic fragmentation positively influence the relationship between fiscal decentralization and property tax revenues. Finally, using quantile regression, the chapter reveals that countries with below-median property tax revenue are less likely to benefit from fiscal decentralization than countries with above-median property tax revenue levels.

Chapter 5 investigates the implications of internal conflicts for property tax revenues and highlights the moderating role of property rights in Sub-Saharan African countries from 1996 to 2019. Estimates indicate that internal conflicts reduce property tax revenues, and property rights play a moderating role in the influence of internal conflicts on property tax revenues. Specifically, when property rights are clearly defined, the effect of internal conflicts is quantitatively weaker compared to situations where property rights are ambiguous or poorly enforced. Moreover, in addition to the positive impact of protecting property rights on property tax revenues, the estimates also provide evidence of government effectiveness, further reinforcing the interconnected relationship among internal stability, property rights protection, and property tax revenues.

Chapter 6 investigates how colonial legacies have a long-term influence on property taxation in sub-Saharan Africa over the period 1996-2019. Specifically, we examine how legal origins interact with institutional quality in determining property tax revenues. The results show that former French colonies tend to collect less property tax revenue than former British colonies. Additionally, our findings indicate that even with high institutional quality, ex-French colonies experience lower property tax revenue than ex-British colonies. These results remain robust when accounting for a set of controls and various alternative institutional variables and when employing an alternative estimation method.

Keywords

Property taxation; Africa; Developing countries; Developed countries; Urbanization; Fiscal Decentralization; Institution; Inequality; Conflicts; Property rights; Digitalization; Financial Development.