The Effect of Property Tax on Income Redistribution in Selected African Countries

Abstract

Tax plays an important role in the redistribution of income, and property tax is no exception. One key area that income redistribution curbs is the area of income inequality, and, statistically, most African countries have a high level of income inequality due to their high Gini coefficient. This study examines the effect of property tax on income redistribution in seven Africa countries from 1990 to 2019. The variables used in the study are property tax, Gini coefficient (proxy for income redistribution), income tax, employment rate, GDP per capita growth, and corruption. The panel autoregressive distributed lag (PARDL) was employed as the econometric technique approach. The findings of the study reveal that property taxes have a positive and significant relationship with income redistribution in the long run in the seven African countries studied. This study recommends the effective administration of property tax. If property tax is effectively administered, it can fulfil its redistributive role.