Due: 11.04.2022 UCLA Luskin School of Public Affairs Class on New Economics of Equity and Sustainability Prof. Laurelyn Mynhier Policy Brief: Vacant Housing Tax in Mumbai, India By Shweta Sundar Abstract The housing market in India suffers from a high vacancy rate of 12.3% and needs 18.78 million affordable housing units. This paper intends to explore the need and potential for a housing vacancy tax, and how it would manifest in the housing market in Mumbai. Based on an extensive online literature review and case studies, the paper would comb out reasons for housing vacancy, and collate learnings from national and international examples of vacancy tax implementation. Eventually, the paper will attempt to propose policy recommendations for a vacancy tax for one city in India, along with ideas on how the tax can be used to support housing affordability. Introduction The housing market Urban metropoli will be hard-pressed to provide affordable, low-cost, dignified housing options in the coming decades. India’s urban population is estimated to double between 2018 to 2050, totaling up to 1.7 billion as estimated by the 2018 World Urbanization Prospects report (United Nations). In 2012, the Government of India estimated a housing deficit of 19 million urban households, 95% of whom belonged to the Economically Weaker Sections (EWS) and Lower-Income Groups (LIG) (MoHUPA, 2012). The housing crisis in India erupts from issues of both an urban housing shortage and housing affordability. Mumbai is considered the financial, commercial, and entertainment capital of India, and the largest and most populous city in the country. With a population of 12.5 million (Census, 2011), Mumbai has a price-to-income ratio of 31.58, ranking 5th amongst the most expensive cities to live in the world. To put things in perspective, New York ranks 20th, and Los Angeles ranks 29th in the global list of house price-to-income ratios (see Figure 1)(IDFC, 2018). The new construction is primarily catering to higher-income households, whereas the majority of the housing shortfall is for EWS and LIG segments. Both the price and rate of housing supply have exacerbated the demand and supply gap in Mumbai’s housing market. The urban poor largely finds respite in varying degrees of informal settlements, which accounts for 13.8 million households (considered underreported), accounting for 17% of all urban households (Census 2011). 26.3% of households live in rental accommodation in slums, and 27.8% live in formal rental housing (Census, 2011). Rental housing is vital to provide low-income families with the necessary social mobility between cities and their villages and lets them avoid the trap of high-cost constraints of owning a house. However, it has steadily declined from 54% in 1964 to 28% in 2011 (Census, 2011). Figure 1: Price-to-income ratios of global cities. Source: IDFC (2018), with data derived from Numbeo 2017. Numbeo is a crowdsourced database of the cost of living in cities around the world. Housing price in Mumbai Housing production in Mumbai is guided primarily by the market logic of supply and demand, having direct implications on housing affordability. Formal housing has not kept up with the demand faced in cities such as Mumbai due to supply-related challenges such as land scarcity, strict land regulations, non-supporting government policies, regulatory roadblocks for new projects, historically restricted FSI, delays in construction, increasing costs of construction, unattractive returns, slow-pace of infrastructure development, and limits on private land ownership (CSEP, 2021), all contributing to inflated housing prices (IDFC, 2018). In addition to this, the Reserve Bank of India (RBI) in 2006 explicitly forbade financing for purchasing land to avoid land speculation (IDFC), making the developers turn to other financing sources. These expensive financing measures dramatically inflate construction costs, which in turn is passed to the consumers. This exacerbates housing affordability and access to the EWS and LIG sections of society. State of housing vacancy in Mumbai Existing simultaneously with a declining rental housing stock is the growing number of vacant houses in large Indian cities, which increased from 6.6 million in 2001 to 11 million in 2011 (Census 2001 and 2011). That puts the growth rate of vacant housing faster than the supply rate of urban households (CSEP, 2021). While India has a vacancy rate of 12.38%, the United States has a vacant homeowners rate of less than 2% (U.S. Census Bureau). The Ministry for Housing and Urban Poverty Alleviation formulated a Technical Group on Urban Housing Shortage in 2012, which simultaneously calculated the unmet demand for rental housing at seven million units. Thus there exists a paradox of housing shortage existing co-exists with housing vacancy. The state of housing vacancy varies for different cities in India. Mumbai records a high vacancy rate of 15%, amounting to 480,000 units, closely followed by New Delhi (300,000 units) (Census 2011). The Census House listing categorizes vacant housing as “a Census house found vacant at the time of House listing i.e. no person is living in it and it is not being used for any other non-residential purpose(s)” (Census). With no national data on reasons for housing vacancy, existing literature and this paper attempt to summarize various reasons for housing vacancy. Figure 2: Urban housing shortage vs houses left vacant across states. Mumbai is the capital of Maharashtra. Source: IDFC (2018), with data derived from Census 2011 and Report of the Technical Group on Urban Housing Shortage 2012 Housing vacancy can be categorized into two main types: intentional and unintentional vacancy. Unintentional housing vacancy is a symptom of the housing market’s demand and supply frictions, which causes a natural vacancy at the equilibrium rate (CSEP, 2021). As demonstrated by US cities where the housing market is almost entirely controlled by the private sector, if the actual vacancy rate diverges too far from the natural rate, the market can regulate the price and bridge the gap. Intentional vacancies are created by housing producers (developers, landlords) who keep their units out of the rental market as a rational decision to maximize utility (investment). A high unintentional vacancy rate is seen as evidence of a distorted land and housing market. Reasons for Housing Vacancy in Mumbai Housing vacancy is a recent phenomenon being experienced by most major cities across the world. The reasons for housing vacancy vary amongst cities, depending upon the local housing market and development context. Various studies identify a menu of reasons for high housing vacancy rates in Mumbai. a) Peripheral housing development Within the Mumbai Metropolitan Area, the vacancy rate rises with an increase in distance from the city center (see Figure 3) (IDFC, 2018). This is reflective of the current trend of high population growth and development taking place in the peripheral belts of Mumbai city, consisting of other municipal corporations and census towns (IDFC, 2018) (CSEP, 2021). Cheaper land availability, lower barriers to construction, and lower cost of construction and permit barriers contribute to growth. This housing, though cheaper than units available in the city, is unattractive for the urban poor due to poor access to transportation infrastructure, public goods, and amenities provision, or access to new or existing livelihood opportunities. Thus housing vacancy is characteristic of speculative developer housing or government schemes concentrated at city peripheries (CSEP, 2021) Figure 3: Percent of residential housing stock vacant for cities in the Mumbai Metropolitan Region. Greater Mumbai is synonymous with Mumbai city in this article. Source: CSEP’s mapping of Census 2011 data on vacant housing. b) Speculative housing at high prices The housing supply in the Indian housing market is more inelastic than in other parts of the world. Supply constraints such as land-use regulations, high taxes, and tedious permit procedures contribute to this inelasticity. This makes a small increase in demand result in a greater appreciation of housing prices (IDFC,2018), making housing that is being created inaccessible to the majority of the population. Mumbai’s high real estate prices and surging demand makes it one of the most lucrative locations for real estate investment in the country, with one of the highest ROIs in the world (Puri). A large segment of these investors is NRIs and PIOs, a major target for marketing outreach by developers. A columnist for a renowned real-estate investment blog claims that developers manage to “offload 50% or more of their inventories to such cash-rich investors” before the local market can participate in the transaction (Puri). Speculative housing is also a favorable commodity to conceal black money and avoid taxes (CSEP, 2021). This investor demand provides developers an incentive to develop speculative high-end housing, both in city centers and peripheries, which is largely inaccessible to the low-income or ‘missing middle’ rental market. c) Regulations- rent control and poor enforcement laws The decline in rental housing stock can be attributed to regulations such as rent control and weak tenant enforcement laws, which is idiosyncratic to most developing countries. This has led to house owners having more than one property to prefer keeping the house vacant instead of going through a tedious process and consequences of renting them out, leading to a decline in rental housing while increasing vacancy rates (CSEP, 2021). Weak regulations are one of the factors affecting the rental yield percent of a city. A study shows that a pro-landlord policy with rent relaxations reduces housing vacancy by 2.8-3.1 percentage points (CSEP, 2021). d) Low rental yields The rental yield is a “component of the net return a landlord can get by investing in a property”(IDFC, p60). Encumbered by the prevalence of rent control, pro-tenant laws, and slow-moving dispute resolution mechanisms, the rental yield in Mumbai is estimated at 2.18% (see Figure 4), which is much lower than in other global cities (IDFC, 2018). The higher the house price and the price-to-income ratio, the lower the rental yield. Lower rental yield results mean a lower ROI. When compared to the high ROI on real estate investment in Mumbai, this results in homeowners purchasing more than one home for capital appreciation and not renting them out, causing a rise in housing vacancy. Figure 4: Rental yields across major cities. Source: Source: IDFC (2018). These state-created barriers to an ‘efficient’ housing market are labeled as market distortions, which many experts agree to be the primary reasons for the high housing vacancy in Mumbai. Historical Economic Perspectives and Outcomes Brief overview of housing trends and policies in post-independent India Housing policy in India has evolved over the past 75 years since its independence, from a wave of statist policies to a market-driven and neoliberal housing market. The immediate years of independence in India saw direct state intervention in housing and housing subsidies, primarily for workers and affordable housing (IDFC, 2018). Housing provision in the first two decades (the 1950s and 60s) saw top-down centralized interventions, with the creation of state housing boards as a consequence of Statism and ISI regimes. This period was witness to issues of government inefficiency, inflated costs, and corruption. In the following decades (the 1970s and 80s), the state, upon realizing its limited capacity to build houses for the growing urban populations, became “an enabler of securing infrastructure and tenure for the poor” (IDFC, 2018, p24), instead of a direct provider of housing, and instituted housing finance mechanisms such as HUDCO and HDFC. The early 1990s saw a growing consensus amongst nations and multilateral institutions about the ineptitude, inefficiency, and corruption of the State in addressing housing concerns. The World Bank intervened with its structural adjustment policies to enable market intervention in sectors that did not require State intervention, such as housing (World Bank, 1993). Hernando De Soto was a key influencer during this time, and propagated the regularization of formal tenure models in all housing policies, to enable capital creation, confront urban informality, and unlock ‘dead capital’ in scarce city centers (De Soto, 2000). The definition of tenure security varies across geographies, and it manifested in Indian housing policies and schemes to focus almost entirely on housing ownership, ignoring rental housing models. The advent of neoliberalization in the Indian economy saw the government's role in housing change from a housing provider to a facilitator of private sector participation in the housing market, mobilizing resources for housing, housing subsidies, land development, and setting up financial and legislative frameworks. With the social blanket of the government rolled back, the poor were increasingly left to navigate the market on an uneven playing field. Since the late 90s, the government of India has launched multiple housing schemes that focus on housing provision for low-income and vulnerable groups, mixing direct provision and incentives for the private sector. In 2005, the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), the largest central government scheme was launched to improve urban infrastructure, provide direct housing via government housing programs, the Basic Services to the Urban Poor scheme, Rajiv Awas Yojana (RAY) (Housing for All), and to correct market distortions. One of its primary objectives was slum rehabilitation and the creation of affordable housing, and many critics have questioned the success of the program (Hingorani, 2011). Due to poor quality construction and access to these peripheral housing projects, these centrally-sponsored projects had a 17% vacancy rate as of March 2017 (IDFC, 2018) Twenty-First Century Perspectives and Proposals The Economic Survey of India 2017-2018 by the central Ministry of Finance highlighted high vacant housing as a result of larger market inefficiencies with respect to housing supply (Ministry of Finance, 2018). Many neoliberal housing policies have been positioned to remove the ‘distortionary legislations’, policies which were enacted post-independence by socialist-leaning government regimes to protect the interests of the poor. The two primary targets are/were: a. Rent Control: A large number of buildings in the island city of Mumbai are still under first-generation rent control laws implemented under the Bombay Rent Control Act (1947), freezing rents for current and future rents for most of the island city, and making evictions extremely difficult. In 2010, 17% of all formal units in Mumbai were under rent control, and in some pockets, it went up to 50% (Tandel et al., 2016). Some of the concerns with rent control have been the dilapidation of the rent-controlled buildings since landowners have no incentive to invest in their upkeep, misallocation of resources, lower rental yields, and a rental stock freeze. Rent control legislation are positioned to be removed by the Model Tenancy Act, 2021, which will be discussed in the next section. b. Urban Land Ceiling Act (1976) was passed by the central government to prevent a large concentration of private land ownership in overcrowded cities such as Mumbai. While it aimed to increase land availability for affordable housing, it led to a decrease in land supply due to legal disputes and encroachments. The Act was finally repealed in Mumbai in 2007 under the JNNURM scheme (Kurup, 2007). Following the lead of the United States, many countries prioritize home ownership with a mix of subsidies and tax breaks, under the belief that it provides “social and financial stability, increases citizen involvement, improves neighborhood safety, and contributes to a better education system” (IDFC, 2018, pg 54). The current ‘Housing for All 2022’ policy by the central government stipulates access to ownership as a mandatory precursor to affordable housing, leaving a large population of the urban poor out of eligibility. In 2021, the Model Tenancy Act was passed to “establish Rent Authority to regulate renting of premises and to protect the interests of landlords and tenants and to provide speedy adjudication mechanism for resolution of disputes and matters connected therewith or incidental thereto” (Government of India). One of its main purposes was to reduce housing vacancy rates across India by instituting risk-aversion policies such as liberalizing rent amounts, nullifying rent control, and proposing alternate judicial counters for dispute resolution, amongst other specifications (CSEP, 2018). However, as of July 25, 2022, only four states (Andhra Pradesh, Tamil Nadu, Uttar Pradesh, and Assam) have adopted the act (The Hindu, 2022). Lastly, the Development Control Regulations 2034 were adopted by MMR in 2018, providing strong tax incentives for developers, increased FSI, and lifting other regulatory and permit barriers to incentivize market activity in housing. Such market-correcting policies may reduce the housing shortage by about 7.5%, when compared to states with less liberal rent regulations (CSEP, 2018), lowering the opportunity cost of the rental market. Literature Review on Vacant Housing Tax Concept of a vacant housing tax Housing and land vacancy are characteristic of major urban cities with high real estate values, lucrative investment markets, and attractive destinations, intrinsically tied to housing affordability. Vacancy taxes are usually implemented when the difference between the natural vacancy rate and the actual rate crosses a certain threshold, which may differ among cities. Mumbai’s high vacancy in its housing stock (15%) would have triggered aggressive policy responses in other global cities. When Paris saw its vacant housing stock reach 7.5%, the council tripled its vacant housing tax from 20% of the rentable value to 60% (Mulholland et al., 2017). Imposed in 2015, the tax’s main purpose was to deter the use of city center homes as secondary residences and use its revenue to fund affordable housing (O'Sullivan, 2016)(Eden, 2017). Vancouver introduced its Empty Homes tax in 2017 when the vacancy rates touched 6.5% (SMW Law, 2022). This transnational perspective indicates the need for immediate policies to address housing vacancies, particularly in the face of dire affordable housing needs in Mumbai. Many countries implement an overarching vacant property tax, which includes a vacancy tax on both land and housing. Due to a lack of data on private and publicly held vacant land by the municipal authorities in Mumbai (The Asian Age, 2018), this paper does not address land vacancy. Furthermore, taxing vacant land may initially nudge some development on vacant land, but in the long run push developers to reduce their land stock and responsiveness to supply affordable housing (CSA, 2019). The practicality of the vacant housing tax needs to assess the rating base, potential avoidance tactics and anti-avoidance rules, and monitoring and enforcement processes (CSA, 2019). Assessment of stakeholders and how it might impact them, along with trade-offs or incentives for political acceptance must be evaluated as well, along with a clear strategy of how the revenue will be utilized. General taxes such as this are subjected to more political pushback due to their universality, thus demanding appropriate community involvement and outreach, and prior communication with the citizens (Banerjee et al, 2019). Most vacant housing taxes are envisioned as revenue-neutral policies to fund local affordable housing initiatives, and new or existing rental housing programs (Gandhi et al., 2017) (SMW Law, 2022). Each city needs to evaluate its housing market to determine the duration of the tax. The length of the tax policy may be directly proportional to the intensity of the market distortion, making the vacancy tax viable for a short period vs a constant tax (CSA,2019). To materially reduce the number of vacant dwellings in the market, the tax rates must vary with the market conditions (O'Sullivan, 2016)(Empty Homes Tax Annual Report, 2021). It is also important to wisely select the definition of ‘vacant housing’ as defined by the tax, to target the intended audience. San Francisco’s vacant housing tax in the upcoming ballot exempts single-family homes and duplexes, which may be ineffective in its aim, according to activists (Dineen, 2022). This might have most likely been a carrot to gain political support, but may fail to address a large vacant housing stock. Additionally, if all properties apart from the homeowner’s primary residence are subject to tax, there is a need for an international repository of property records, which will prove to be logistically difficult (CSA, 2019). Policy precedents Vacancy taxes is increasingly gaining popularity as large cities across the world face acute housing crises and rental vacancy rates much lower than the natural vacancy rate. Vancouver, Washington DC, Oakland, Melbourne, and many French municipalities and UK councils (CSA, 2019) (CSEP, 2021) have implemented vacant housing taxes within the last 4 years with locally appropriate variations. Los Angeles (Madar & Praw, 2020), Berkeley (Lauer, 2022) and San Francisco (City and County of San Francisco, 2022) are currently considering vacant property taxes in their upcoming ballot measures. The most thoroughly studied case study on vacant housing tax is the Empty Homes Tax in Vancouver. Case study: Vancouver’s Empty Homes Tax, 2017 (Empty Homes Tax Annual Report, 2021) Being one of the most expensive cities in Canada, Vancouver’s low 0.6% rental vacancy rate in 2017 prompted the city to adopt an Empty Homes Tax (EHT) as one of many policy initiatives within the 10-year Housing Vancouver Strategy to address the housing crisis and improve affordability within the city (City of Vancouver). This was the first time a vacant housing tax was implemented in North America. The tax aimed to return underutilized units into circulation and relieve pressure from the rental housing market. The net revenues from the tax will be reinvested into affordable housing initiatives in the city. Some of its elements are: ● The tax will apply only to secondary properties used for speculative holding that could potentially be in the housing market. Housing is considered vacant if it is not the primary residence of the owner, and vacant for 6 months or more within 12 months ● Due to various criteria for defining vacant housing and exemptions, only 10% of the vacant housing counted in the census is taxed (CSA, 2019) ● Money collected from the EHT is first allocated to cover annual operating costs with the remainder invested in affordable housing initiatives (grants for non-profit developers and land acquisition). The city has seen a 26% reduction in vacant houses (1.2% to 0.8%) between 2017 and 2020 and collected $86.6 million in tax revenues. The rental housing stock increased from 25.2% to 28.8% within that period. The tax started with a 1% tax rate between 2017-2019, increased to 1.25% in 2020, and 3% in 2021. The case exemplifies clear expectations from the vacancy tax, an effective strategy in place to utilize revenues for redistribution, and politically aligned stakeholders supporting the efficient implementation of the policy. The French experience with a vacant housing tax has been positive as well, responsible for decreasing the vacancy rate by 13% (Segú 2018). Vacancy tax varies between a percentage of property rate, and fixed amounts based on the size of the unit. In 2018, Oakland approved Measure W, a per-parcel tax on residential properties; $6,000/year for condos, single-family units, townhomes, and duplexes, and $3,000 for ground floor commercial properties. The revenue collected is being invested in addressing the homelessness crisis and illegal dumping (Engberg, 2022). This policy brief proposes the first vacancy tax in a city within a developing country. Benefits, drawbacks of and barriers to the tax COVID-19 has brought to the forefront the essential services provided by the labor workforce in making the city run, and it is the responsibility of the city to ensure dignified housing for the working class. The tax would nudge homeowners to rent their houses and increase rental housing stock, while neoliberal policy measures in the pipeline will assure and secure their investments (Empty Homes Tax Annual Report, 2021). The tax may also dissuade developers (to build speculative housing), and governments (from building peripheral housing), without due assessment and analysis of housing demands and shortages. The tax could nudge some homeowners who are holding out their property from a segment due to the socio-economic and religious barriers, to reevaluate the opportunity costs of discriminating against certain groups. While most of the additional rental housing stock would likely cater to the ‘missing middle', the funding boost to existing or new ownership and rental housing assistance programs would significantly improve housing affordability for the low-income and marginalized groups. While many valuable benefits have been showcased by case studies in other countries, it is important to set expectations for such taxes in Mumbai when attempting to address an issue as prevalent as housing affordability. Vacancy housing tax has predominantly been implemented in developed economies, making it challenging to derive transnational takeaways. This tax does not claim to bring an influx of affordable housing units into the city. It is important to understand its efficacy within the existing housing policy ecosystem. Proponents of the vacancy tax admit its limited role in increasing housing availability and stress on the need for complementary policies addressing housing production (Engberg, 2022). There are significant drawbacks and barriers to this tax, which should be dampened with additional measures to protect the interests of low-income households. While the tax may give an initial boost to the rental market, in the long run, vacancy taxes, seen as an unavoidable tax on development, might be passed on to the buyers or renters, increasing housing costs (CSA, 2019) (Rancaño, 2022). After the first year, many house owners may practice tax avoidance and reduce their efficiency and revenues. Such a tax may also deter developers from being responsive in the housing market out of fear of high tax payments during the initial vacancy period after construction. This will be counterproductive to the success of neoliberal policies as envisioned by the Governments of Maharashtra and India. A general vacancy tax will get high pushback, particularly from the elite who have multiple homes, and several concessions will have to be made to balance political support without diluting the efficacy of the tax. Many of these elites tend to be politicians, making it politically hard for the tax to pass its development phase. Most administrative services in India are overburdened and inefficient, which would make the tax collection and redistribution model difficult to implement. The tax will have to be combined with an existing income tax or property tax. Income tax is collected by the central government, and the property tax is collected by the city, making the revenue from both difficult to redistribute as rental or housing assistance at a more local level. Further issues of lack of transparency and corruption may deter equitable redistribution. The next section attempts to provide recommendations to address some of the drawbacks and barriers. Recommendations for a housing vacancy tax in Mumbai It is important to address both the cause and the symptoms of housing unaffordability. While many upcoming legislative measures such as the Model Tenancy Act 2021 and the DCPR 2024 are addressing causes such as rent regulations, dispute mechanisms, and other supply barriers, no policy provision is addressing the symptom - housing vacancy. It could take many years for the market to correct itself, as the housing shortage increases with detrimental effects on low-income families. Some overarching recommendations are: ● Improving data repository on reasons for housing vacancy: The housing vacancy figures are based on Census 2011, and the current housing vacancy numbers are unknown. National Sample Survey (NSSO), which is conducted every 5 years with a smaller sample size, must be used to extrapolate recent housing vacancy data. Additionally, information on reasons for housing vacancy will help formulate policy details that will better target the causes. ● The definition of ‘vacant housing’ in the policy is important to address the target audience efficiently. However, the wider the definition, the more political opposition. A balance between political acceptance and outcome efficacy must be achieved. The type of vacant housing that might be exempted could be the new units awaiting sale or leasing, houses under construction or renovation, or commercial housing options such as hostels (CSA, 2019). A time period of housing occupancy would be a good metric to determine whether a house is vacant or not. ● A detailed economic analysis of the housing market in Mumbai, and its property and rental prices are needed to determine the tax rate, its geographic range of application (blanket policy or only in pockets of MMR region), as well as the duration of the tax. The tax rate must be strategically set to not cause an initial public opposition, which is harder to recover from, than a low tax rate that can be incrementally increased. ● Collection mechanism - the tax could be either combined with the income tax (collected by the central government) or with the property tax (collected by the city municipality). Due to the local nature of the problem that the tax is attempting to address, vacancy tax as an addendum to the property tax is recommended. However, it should be managed by a separate entity that addresses tax claims, disputes, and other grievances. ● Identify critical housing needs and programs, existing or new, that the tax revenue can support in the MMR region. It is recommended that the prime focus be rental housing assistance for low-income households, particularly those facing social discrimination. ● The tax revenue should be spent at the discretion of local government agencies at the Ward level, where officials are more aware of the nuanced housing needs, and can dissipate assistance more easily. Additional capacity building of local government officials must complement the tax policy. ● Some incentives must be provided to developers to mitigate their potential unresponsiveness in the housing market. Incentives such as greater duration of housing vacancy allowed for new development, or tax exemptions for developers building a percentage of affordable housing could be explored. Additional incentives for political acceptance of the tax might be explored, but not at the expense of diluting the tax. ● Substantial communication with the public on the intent of the tax and revenue distribution to gain political acceptance and support. Continuing Evaluation It is important to regularly evaluate the efficacy of the tax, and monitor the housing vacancy rates and housing prices. The tax will have to be modified over time according to market conditions to bolster its impact. To avoid any instances of bureaucratic corruption or claims of it, an independent third party body needs to conduct compliance checks, impact analysis, and recommend tax modifications. Tax-avoidance should be expected, requiring the establishment of stringent anti-avoidance rules. Many studies recommend intensive random audits on selected properties, and imposition of high penalties for tax avoidance (CSA, 2019). Random sample surveys to evaluate housing vacancy could be undertaken to monitor progress. The same independent evaluator would also have to assess the efficacy of the revenue redistribution programs and its impact on improving housing access and affordability. Conclusion The vacant housing tax is a tool to capitalize on the housing investments of the wealthy, and can be thought of as a bleak extension of a wealth tax. If designed and implemented correctly, it can be a powerful tool and precedent of redistributive fiscal policies in India. Since this is the first vacancy tax to be applied in a city with a large informal housing market, context-specific ingenuity will be crucial to its success, along with simultaneous policy interventions to improve the outcomes of this tax, and overall housing affordability. Mumbai’s vacant housing tax will be a model for other Indian cities to customize and implement. References The Asian Age. (2018, September 16). No records on total land owned in state by Mhada. The Asian Age. Retrieved November 30, 2022, from https://www.asianage.com/metros/mumbai/160918/no-records-on-total-land-owned-in-st ate-by-mhada.html Banerjee, A.V. and Duflo, E. (2019). Chapter 6: In Hot Water in Good Economics for Hard Times, Hachette Publishing. City of Vancouver. (n.d.). Purpose of the Empty Homes Tax. City of Vancouver. Retrieved November 30, 2022, from https://vancouver.ca/home-property-development/why-an-empty-homes-tax.aspx CNBC. (2022, October 9). Mumbai Witnessing Huge Demand-Supply Gap For Affordable Housing: Report. CNBCTV18.com. Retrieved November 14, 2022, from https://www.cnbctv18.com/real-estate/mumbai-huge-demand-supply-gap-affordable-hou sing-14896851.htm De Soto H. 2000. The mystery of capital: why capitalism triumphs in the West and fails everywhere. New York: Civitas Books. Dineen, J. (2022, October 20). Are S.F. landlords sitting on tens of thousands of empty homes? Vacancy tax could put debate to rest. San Francisco Chronicle. Retrieved November 30, 2022, from https://www.sfchronicle.com/bayarea/article/Are-S-F-landlords-sitting-on-tens-of-thousan ds-17522816.php Eden, E. (2017, March 31). Paris Targets Vacant Second Homes With 60% Tax. Planetizen. Retrieved November 30, 2022, from https://www.planetizen.com/node/92029/paris-targets-vacant-second-homes-60-tax Empty Homes Tax Annual Report [2020 Vacancy Reference Year]. (2021, November 1). City of Vancouver. https://vancouver.ca/files/cov/vancouver-2021-empty-homes-tax-annual-report.pdf Engberg, C. (2022, October 26). Vacant House Taxes: One Tool to Ease Housing Pressures. Shute, Mihaly & Weinberger LLP. Retrieved November 25, 2022, from https://www.smwlaw.com/2022/10/26/vacant-house-taxes-one-tool-to-ease-housing-pres sures/ Gandhi S., Green, K. R. & Patranabis, S. 2021. India’s housing vacancy paradox: How rent control and weak contract enforcement produce unoccupied units and a housing shortage at the same time. CSEP Research Foundation Working Paper. Gandhi, S., Munshi, M., & Sinha, P. (2017, May 3). Why are so many houses vacant? The Leap Blog. Retrieved November 30, 2022, from https://blog.theleapjournal.org/2017/05/why-are-so-many-houses-vacant.html Gandhi, S., Tandel, V., Patel, S., Pethe, A., Agarwal, K., & Libeiro, S. J. (2014, May 28). DECLINE OF RENTAL HOUSING IN INDIA: A Case Study of Mumbai. Marron Institute. Retrieved November 30, 2022, from https://marroninstitute.nyu.edu/uploads/content/Decline_of_Rental_Housing_in_India.pdf Hansen, Carl, (2019). Vacant land taxes and housing supply. Working paper for the New Zealand Productivity Commission. Capital Strategic Advisors The Hindu. (2022, July 25). A year on, only four States adopt Model Tenancy Law. The Hindu. Retrieved November 25, 2022, from https://www.thehindu.com/news/national/a-year-on-only-four-states-adopt-model-tenanc y-law/article65681473.ece Hingorani, Pritika. (2011). Revisiting Low Income Housing- A Review of Policies and Perspectives. India Urban Conference 2011: Evidence and Experience. Indian Institute of Human Settlements. IDFC Institute. 2018. India Infrastructure Report 2018: Making Housing Affordable. Mumbai. Indian Express. (2022, October 9). Mumbai: Unavailability of urban land, insufficient transport led to demand-supply gap for affordable housing, finds report. The Indian Express. Retrieved November 13, 2022, from https://indianexpress.com/article/cities/mumbai/mumbai-urban-land-insufficient-transportdemand-supply-affordable-housing-8199223/ Knight Frank, 2022, Brick by Brick- Moving towards 'Housing for All'. Kurup, E. J. (2007, December 16). ULCRA across the country. The Economic Times. Retrieved November 30, 2022, from https://economictimes.indiatimes.com/property/ulcra-across-the-country/articleshow/262 5417.cms?from=mdr Lauer, K. (2022, June 19). Housing | - Berkeley studying 'empty homes' tax for November ballot. East Bay Times. Retrieved November 25, 2022, from https://www.eastbaytimes.com/2022/06/19/berkeley-studying-empty-homes-tax-for-nove mber-ballot/ Madar, K., & Praw, D. A. (2020, July 7). Proposed Los Angeles City Residential Vacancy Tax Pushed to 2022 | Insights. Holland & Knight. Retrieved November 25, 2022, from https://www.hklaw.com/en/insights/publications/2020/07/proposed-los-angeles-city-resid ential-vacancy-tax-pushed-to-2022 MoHUPA, (2012). Report of the Technical Urban Group (TG-12) on Urban Housing Shortage 2012-17. GoI. Mohanty, M. (2014, March 8). Odisha government rolls out "world's largest" slum land rights project. Retrieved October 21, 2022, from https://economictimes.indiatimes.com/news/politics-and-nation/odisha-government-roll-o ut-worlds-largest-slum-land-rights-project/articleshow/64068035.cms?from=mdr Monani, D., Joshi, S., & Zeeshan. (2020). The Paradox of Vacant Houses in India- Ahmedabad Report. Anant National University. Ahmedabad, India. Mulholland, R., Rudgard, O., Pinkstone, J., Torre, B., & Moules, J. (2017, January 27). Britons with property in Paris to be hit with new tax hike. The Telegraph. Retrieved November 30, 2022, from https://www.telegraph.co.uk/news/2017/01/27/britons-property-paris-hit-new-tax-hike/ Office of Controller. (2022, September 29). Residential Vacancy Tax: Economic Impact Report. City & County of San Francisco. https://sfcontroller.org/sites/default/files/Documents/Economic%20Analysis/RVT_econo mic_impact_final.pdf O'Sullivan, F. (2016, June 15). Paris Wants to Raise Property Taxes on Second Homes. Bloomberg.com. Retrieved November 30, 2022, from https://www.bloomberg.com/news/articles/2016-06-15/paris-wants-to-raise-property-taxe s-on-second-homes Puri, A. (n.d.). Which Mumbai Real Estate Locations Still Deliver Good ROI? RealtynMore. Retrieved November 25, 2022, from https://www.realtynmore.com/which-mumbai-real-estate-locations-still-deliver-good-roi/ Rancaño, V. (2022, October 28). Should SF and Berkeley Tax Empty Homes, Following Oakland's Lead? KQED. Retrieved November 30, 2022, from https://www.kqed.org/news/11930303/should-sf-and-berkeley-tax-empty-homes-following -oaklands-lead Segú, M. (2018). Does the Taxation of Vacant Properties Improve Housing Affordability in Cities? In IEB Report 2/2018 (p 15-17). Institut d’Economia de Barcelona (IEB). https://ieb.ub.edu/wp-content/uploads/2018/07/IEB_REPORT_22018_v8.pdf Shira, D. (2019, March 5). The Economy of Mumbai - India's Commercial Capital. India Briefing. Retrieved November 13, 2022, from https://www.india-briefing.com/news/economy-mumbai-india-commercial-hub-6704.html/ SMW Law. (2022, October 26). Vacant House Taxes: One Tool to Ease Housing Pressures. Shute, Mihaly & Weinberger LLP. Retrieved November 30, 2022, from https://www.smwlaw.com/2022/10/26/vacant-house-taxes-one-tool-to-ease-housing-pres sures/ U.S. Census Bureau, Homeowner Vacancy Rate in the United States [RHVRUSQ156N], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/RHVRUSQ156N, November 13, 2022. World Bank. 1993. Housing: enabling markets to work (English). In: A World Bank policy paper. Washington DC: World Bank.