The effects of bequest tax on land prices and land use

The paper examines whether bequest taxation affects land use, using an over lapping-generations model. In Japan, in assessing land for the purpose of i nheritance taxation, the assessed value is less than the market value; howe ver, other assets are valued at market value. Such an asymmetry creates a g reater incentive for the older generation to hold land, because the probabi lity of decease is higher for older than younger persons. With constant tec hnology available in each generation, the inheritance tax is found to lead to inefficient land use, sluggish conversion of land over time and higher l and prices. JEL Classification Numbers: H24, R14.