Neoliberal urban segregation and property tax: A critical view of Santiago, Chile

Urban property taxes are primordial land value capture mechanisms that can potentially redistribute public income to underprivileged areas in a city. However, in Santiago, Chile, a city with considerable socio-spatial segregation correlated with significant disparities in municipal budgets, social welfare, and intergenerational reproduction of wealth, the property tax system is weak to address this issue effectively. This study analyses the potential redistributive capacity of property taxes in Greater Santiago, comparing the evolution of real estate surplus values with municipal budgets. These results show that a 2% increase in property taxes would suffice to equalize per capita municipal budgets, essential to redistribute social welfare. In Chiles’s neoliberal planning framework, we argue that weak property taxes are critical for the intergenerational reproduction of wealth and poverty in different municipalities. Property as capital is efficient for capturing unearned value in the long term and obtaining rental income, two mechanisms of inequality reproduction, as property accumulation is only feasible if it is not progressively taxed. In sum, this analysis of property taxes in Santiago contributes to the theoretical understanding of passive mechanisms of inequality reproduction in a neoliberal system and empirical support for a progressive increase of property taxes.