Abstract

Since its insertion in the Italian tax system, the property tax has been intensely discussed by politicians and researchers. The latters have mainly focused on its distributional effects and impacts on yardstick competition and equity. To the author's knowledge, at least in Italy, none has analyzed the impact of the property tax on the supply elasticity of housing. Twenty years after its creation, we think that time has come to trigger a reflection on this issue. Therefore, following a well-established methodology used in the literature, the paper aims to test the impact of the property tax (called ICI) on the supply elasticity of housing. In particular, it tests whether the insertion of the tax has fostered rather than prevented the soil sealing and the land-use changes. In other words, considering the overall devolution process that started in the '90 in Italy and the structure of the tax, it verifies whether one of the (unintentional) effects of the tax was to engender an adverse "alliance" between public decision makers and houses builders.