LAPs usually have impacts on tax collection levels. Quantification of the potential impact that an LAP can have on tax collection in a country, region or municipality can be important from the perspective of a government, regarding the decision whether or not to fund a project, or as input to the dialogue and definition of public policy on decentralization. Analysis of the fiscal impact of an LAP compares the present value of the investment (i.e. the discounted value of the annualized budget of the LAP) with the present value of the incremental net flows of taxes resulting from LAP actions. The greater the present value of the net flow of tax collection with respect to the present value of the LAP investment, the greater the incentives for the government to fund the project, as it is in this way that future taxes collected will cover investment costs.

LAPs usually include within their investments resources for the updating of cadastres, the modernization of municipal property information systems, and the training of cadastral unit staff, which strengthens municipal land administration systems. The results of these investments can generate an increase in the cadastral base, in other words an increase in the number of properties which should pay the property tax as a result of the cadastral update¹.

The increasing dynamism of land markets as a result of LAP actions, and the greater number of entries in registers due to this effect, can similarly generate an increase in the number of property transactions and thus have an incremental effect on the collection of property tax or other taxes, depending on the country. The fiscal benefits of LAPs are normally collected by municipalities.

For further information on this subject, refer to the fact sheet Impact on fiscal operations of LAPs.