Shared Residential Occupancy and Property Tax Compliance

This article examines for the first time the property tax compliance behavior of shared occupancy arrangements, where homeowners rent out part of their own home to tenants. This is a popular occupancy arrangement in emerging economies, arising due to financial constraints of homeowners. Using administrative-level data from Ghana, where homeowners are responsible for tax payments, we find that owner-and-tenant-occupied dwelling units, as compared to owner-occupied units, are more likely to be in tax arrears. Their non-compliance is more sensitive to rate increases than owners. Consistent with the theory of reciprocity, non-compliance is greater among the shared dwelling units located geographically farther away from public amenities (suburban police stations and hospitals). Our findings highlight the financial fragility of shared occupancy arrangements and provide new insights for policymakers on their tax compliance