No taxation without property rights
Formalization of property rights on land and tax revenues from individuals in sub-Saharan Africa
The arguments that property rights and taxation positively affect development are well established in separate literatures, but the link between property rights and taxation is under-studied.
To address this gap, we theorize that formalization of individual property rights facilitates economic exchange at scale, providing a viable opportunity for individuals to improve their economic standing, in exchange for which property owners assent to pay taxes. We illustrate the argument by comparing the historical evolution of tax states in early modern Europe and colonial Africa.
Empirically, we examine the links in sub-Saharan Africa between (1) the ease of access to state-recorded information on land ownership and assent to paying taxes using individual-level data from Afrobarometer, and (2) the formalization of individual property rights on land, measured through novel data on the extent of cadastral records, and government revenue from taxes on individuals at the cross-country level.