ASK an economist about which are the most efficient kinds of taxes, and property taxes will be high up on the list. They distort behaviour less, and are more growth friendly, than taxes on income, employment or even consumption.

Yet most countries raise relatively little money from taxing property. John Norregaard at the IMF calculates that the average rich country—including all levels of government—raises 5% of its total tax take from annual property taxes. In middle-income emerging economies, the norm is lower still, at 2% of total revenues.

These averages mask big differences between countries. Property taxes loom largest in Anglo-Saxon economies: according to Mr Norregaards’s figures some 17% of all tax revenue in America comes from property taxes. They make up 70% of local governments’ tax take property taxes. But in Germany only 2% of revenues come from property taxes; and in Switzerland it’s a mere 0.4%.*

Our Free exchange column this week looks at property taxes and argues that they should be more widely used.

Taxing land and property is one of the most efficient and least distorting ways for governments to raise money. A pure land tax, one without regard to how land is used or what is built on it, is the best sort. Since the amount of land is fixed, taxing it cannot distort supply in the way that taxing work or saving might discourage effort or thrift. Instead a land tax encourages efficient land use. Property developers, for instance, would be less inclined to hoard undeveloped land if they had to pay an annual levy on it. Property taxes that include the value of buildings on land are less efficient, since they are, in effect, a tax on the investment in that property. Even so, they are less likely to affect people’s behaviour than income or employment taxes. A study by the OECD suggests that taxes on immovable property are the most growth-friendly of all major taxes. That is even truer of urbanising emerging economies with large informal sectors. Property taxes are a stable source of revenue in a globalised world where firms and skilled people can easily move. They are also less prone to cyclical swings. In the financial bust America’s state and local governments saw smaller declines in property taxes than other forms of revenue, largely because the valuations on which tax assessments are based were adjusted more slowly and less dramatically than actual prices. Property taxes may even restrain housing booms by making it more expensive to buy homes for purely speculative purposes.

Given these advantages, why don’t governments raise more money from property taxes? A few are trying. Mr Norregaard finds close to 20 countries that have, or are about to, introduce land taxes or property taxes. For some, particularly in emerging economies without complete land cadastres, these taxes are hard to implement. But a big factor is that they are wildly unpopular. Remember California’s Proposition 13, the 1978 amendment to the state constitution to limit property taxation which is widely thought to have spawned the 1980s tax-cutting revolution. One reason Mario Monti, Italy’s technocratic former prime minister, lost the election earlier this year was his much–reviled decision to raise the property tax.

The column points to an interesting NBER paper which helps to explain why.

Voters hate property taxes because they are what economists call “salient”: the burden is obvious, easy to calculate and hard to avoid. An intriguing new paper by Marika Cabral and Caroline Hoxby at Stanford University shows what a difference this makes. Most American homeowners pay their property taxes in one or two lump sums during the year. Around a third (mainly those with mortgages) have their tax payments bundled in with monthly mortgage payments. The economists find that how people pay their property taxes affects their tolerance for them. The more people pay in lump sums, the lower property taxes are likely to be. For property taxes to become a much bigger source of revenue, governments must apparently ensure people don’t realise how much they are paying.

* For the wonky, these ratios are based on the IMF’s definition of total tax revenue and so exclude social-security taxes in the denominator. They are thus slightly different to the ratios you find on the OECD’s tax data-base.