# **1. Introduction**

Starting in the late 1990s, Ethiopia’s rural land registration and certification process strengthened tenure security by recognizing rights that both women and men have to rural land <mark>(Deininger et al.</mark> 2008; Deininger et al. 2011; Holden and Tilahun 2020). Certificates for land use rights were issued with significant involvement of newly established land-use community representatives, including the requirement that at least one representative be a woman (Bezabih et al. 2016; Deininger et al. 2008). As a result, many women were named on land certificates (Holden et al. 2011).

The responsibilities of holders of rural land rights include payment of land use fee and agricultural income tax, which are determined by the total area of the land held (Hill et al. 2017). These land-based taxes constitute less than 0.5 percent of total tax revenue (Mesfin and Gao 2020) and tax rates vary by region. Land taxation is consistent with two principles of taxation, economic efficiency and ease of administration (Bird and Slack 2005; Skinner 1991). Land taxes are economically efficient because, with fixed land supply, they are unlikely to induce behavioral responses (Bird and Slack 2005). Area-based land taxes are often introduced, as in Ethiopia, where rural land markets do not exist or do not function well, making it difficult to administer value-based taxes (Franzsen and McCluskey 2017; Sah and Stiglitz 1985; Skinner 1991). However, a tax based on the land size is likely to undermine the equity principles because it is not always correlated with property values, productivity, or agricultural income (Bird and Slack 2005; Khan 2001; Norregaard 2013; Skinner 1991; Sah and Stiglitz 1985). Yet empirical analysis of the distributional impact of land taxes has received little attention (Norregaard 2013). Notable exceptions have found that area-based land taxes are regressive in Rwanda (Ali et al. 2020; Kalkuhl et al. 2018), in Indonesia, Peru, and Nicaragua (Kalkuhl et al. 2018), and in Ethiopia (Hill et al. 2017; Mesfin and Gao 2020).

Survey data on tax payments and individual disaggregated land ownership has also been scarce to better understand the distributional analysis of land tax policy. This includes understanding how tax burdens differ for the groups that are most economically vulnerable, such as women. This paper examines the gender implications of the tax incidence of the rural land use fee and agricultural income tax in light of expanded recognition of land rights on the one hand and the regressivity of area-based land taxation on the other. To estimate tax incidence, we use new data on household taxation and individual land ownership in the Ethiopian Socioeconomic Survey (ESS4) 2018/2019, part of the World Bank Living Standards and Measurement Study (LSMS). With what we know about the regressivity of these taxes in Ethiopia (Hill et al. 2017; Mesfin and Gao 2020), we assess horizontal equity by looking at tax burdens across gender-disaggregated households and individuals. Individual tax incidence is imputed in proportion to the amount of the household land a person owns, using self-reported ownership data.

There are two key findings from our study. First, the rural land use fee and agricultural income tax are regressive in that poorer households face a larger tax burden than wealthier households. Second, the tax burden of femaleheaded and female-only households (with no male adults) is 37 percent higher than for male-headed and dual adult households (with both male and female adults present), which violates the horizontal equity principle. The gender differences in household tax incidence persist when we impute tax liabilities using land area and regional tax schedules. There is also a gender difference in individual tax incidence, but the magnitude is smaller because the gender gap in individual landholdings is small.

There are several possible explanations for the horizontal gender inequity in taxation: (1) Research in Ethiopia has found a gender difference in agricultural productivity because of low agricultural productivity on farms rented out by women and women’s lack of access to inputs, credit, extension services, and social networks (Aguilar et al. 2015; Ghebru and Holden 2015; Teklu 2005). Gender norms limiting women’s involvement in agriculture have also forced women to rent out land, while receiving only half of the yield on the rented-out plots (Teklu 2005). Even though area-based land tax liabilities for land of similar area are the same, lower 2