Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/192578 
Year of Publication: 
2009
Series/Report no.: 
Discussion Papers No. 596
Publisher: 
Statistics Norway, Research Department, Oslo
Abstract: 
Taxes on housing consumption have attractive features. They can enhance overall efficiency, function as automatic stabilizers, and work progressively. Implementation, however, requires a careful balance between economic ambition and political reality. This article suggests a 5-stage procedure: identification; estimation; data acquisition and combination; empirical investigation; and tax function construction. It illustrates how to implement by employing the rental-equivalence principle to estimate recent values of owner-occupied housing consumption in a cross-section of Norwegian households by imputing rent for owners based on observed rents in rental markets. It analyzes the distribution of imputed rent over the income range, and demonstrates that imputed rent is a necessary good. A simple tax scheme on real households in a dataset from 2006, shows how a housing tax can be structured with attractive features. Such a tax scheme would, in contrast to the current interest payment subsidy, work counter-cyclically and could, if used as a substitute for income taxes, reduce deadweight losses from labor income taxes. In its suggested form, it would generate approximately 12 billion NOK in revenue for Norway.
Subjects: 
automatic stabilization
deadweight loss
distribution
efficiency
housing taxation
imputed rent
progressive levy
rental equivalence
JEL: 
C14
C21
D12
D63
H23
Document Type: 
Working Paper

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