Further, they need to be carefully designed so that individuals cannot “game the system” by, for example, misrepresenting the true use of a property. Designing property taxes and charges to tackle urban sprawl (cont.) Perverse incentives are created when single-family residential properties are offered lower taxes than higher-density properties of the same value (Haveman and Sexton, 2008). When property taxes are based on land value, rather than buildings or other improvements to the property, owners have an incentive to develop the land to its most profitable use.