Abstract: Taxes on immovable property have a small role in modern tax systems and in most countries they accrue to municipal budgets. However, in recent years, there has been an increased interest from scholars and policymakers in their potential to finance the public sector. Property taxes have an immobile base, thus they do not distort markets. In public finance literature they are considered among the best fiscal instruments from an efficiency point of view. At the same time, depending on their organization, immovable property taxes can have redistributive effects. Furthermore, their administration is relatively simpler and less costly than the administration of other taxes. Thus, in the context of globalization and increasing capital mobility, these taxes have significant advantages, which are worth examining. Against this background, the present paper has as an objective to analyze the potential of immovable property taxes to finance the public sector. The paper is organized as follows: the first part considers the effects of immovable property taxes from an efficiency point of view; the second part dwells on the reasons for the small role of these taxes in modern tax systems; the third part outlines the recent reforms in Europe; and the fourth part concludes.
