suggests that many African cities have thus far failed to live up to this challenge (Jedwab et al. 2017) and instead are crowded, costly, and disconnected (Lall et al. 2017).<sup>4</sup> In light of the durability of urban buildings and infrastructure, this may in the long term affect city structure and competitiveness. High transport and wage costs resulting from inappropriate infrastructure and lack of affordable services may trap some cities in a low-level equilibrium that leaves them unable to competitively produce goods that are tradable globally (Venables 2017). Considering its high expected rates of city growth in the near future and the high cost of providing services after cities are built, this is particularly pertinent for Africa.

Property taxes have long been identified as the largest source of untapped municipal revenue that could ease the revenue constraints on local governments and allow the emergence of competitive cities (Collier et al. 2017). Coverage with digital cadastral maps is a necessary precondition if property taxes are to be collected both effectively and fairly.<sup>5</sup> Where cities expand rapidly, it is also a precondition for effective planning and delivery of services. Yet, as table 1 shows, of 159 non-OECD countries in the World Bank’s _Doing Business surveys_ , only about a third have registered and mapped most of the main city’s private plots (though not necessarily public land) and only about 20% percent have digital cadastral maps available. Only 5% of African and South Asian countries, where most of the expected surges in urban population will be concentrated, have digital cadastral records even for the main city. For those countries, use of digital products based on remotely sensed imagery can be transformational, opening new avenues for collecting local revenue and helping to clarify and realize other benefits from documenting ownership rights.

# **2.2 Pros and Cons of Taxes on Land and Other Real Property**

In developing countries, taxation as a share of GDP is only 25–50 percent of that in developed economies (Besley and Persson 2014), primarily because (i) a great deal of the economic activity is informal, beyond the reach of traditional taxes on income and profits; (ii) institutional capacity to collect taxes is more limited; and (iii) even if taxes are assessed and levied, cultural and political factors such as fragmented polities, lack of transparency, and a minimal sense of national identity may cause widespread avoidance of payment.

It has long been noted that local taxes on land and property can avoid some of these shortcomings and that, because land cannot be moved, they are difficult to avoid, can be designed to fall mainly on the wealthy, and are relatively stable against shocks (Norregaard 2013). They are thus less distortionary and less subject to tax competition than consumption or income taxes.<sup>6</sup> Moreover, by raising the cost of holding property,

> 4 Microdata confirm that developing countries are seeing a rapid reallocation of workers to densely populated areas (Gollin et al. 2017).

> 5 Paper maps are susceptible to unauthorized tampering, difficult to update or use for planning, and imply that collection of property taxes will incur high transaction costs because they preclude low-cost electronic billing or tax collection via mobile money.

> 6 In fact, a number of revenue-neutral tax reforms to boost growth often aimed to shift part of the revenue base from income taxes to consumption and property (Norregaard 2013).

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