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this group, Bulgaria, Russia, and Georgia stand out by relying to an important extent (close to or above one percent of GDP) on immovable property taxes. The difference between high income and middle income countries with regard to the dispersion of yield-ratios is striking and abundantly clear from Figure 4.
Figure 4. Distribution of Yields from Immovable Property Taxes, 2009
While the immovable property tax may not take up a central position in the overall revenue systems of most countries, it frequently contributes significantly to the financing of local governments. Hence, an almost defining aspect of property taxes is their assignment predominantly to lower levels of government, indicating that increased reliance on this source of revenue involves important issues of inter-governmental fiscal design. Appendix Tables 3 and 4 shed some light on this particular role of immovable property taxes for high income and middle income countries, respectively: the penultimate column show, for example, that the share of the immovable property tax in total local taxes is 100 percent in Australia, Ireland, and the United Kingdom, with an average of 37.7 percent in high income countries, and slightly less (35.5 percent) in middle income countries; and the last column of each of the two tables demonstrates that all of the immovable property tax revenue collected by government accrues solely to local governments in the large majority of both high income and middle income countries.
Interestingly, there are indications that decentralization in itself may incentivize increased revenue mobilization from property taxation. Bahl and Martinez-Vazquez (2008) provide empirical evidence of reverse causation in the sense that the demand for property taxation is in itself driven by the level of decentralization. This supports the notion that increased reliance on property taxation ideally should be part of a clearly formulated strategy for strengthened decentralizationan issue beyond the scope of this paper. But the fact that developing, emerging, and transitional countries broadly are less decentralized than