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School of the Built Environment
Faculty of Technology, Design and Environment
Purpose. The paper presents the findings from a series of case studies that examine the problems faced by countries seeking to introduce value-based recurrent property taxes to replace ones levied on the basis of area or inventory value. It identifies that two of the most significant barriers are the absence of comprehensive list of taxable properties and inadequate data on transaction prices. Both of these can be overcome with sufficient resources but this raises the question as to why governments are reluctant to do so in spite of the advantages of such a change. Design/ methodology/ approach. The paper makes particular use of case studies of Moldova, Poland, Serbia, and Turkey, which have explored the potential of introducing value-based recurrent property taxes, and the issues they have faced. The case studies have been produced by participant observers who have had the opportunity to examine developments over long periods of time. The case studies are set against a wider statistical analysis of the role of recurrent property taxes in tax systems. Findings. Putting in place comprehensive systems for registering properties and recording their characteristics and systematically collecting data on transaction prices require significant investment over a long period of time. This requires commitment on behalf of governments. Governments may be reluctant to support this because of the opposition such reforms can face unless confronted with compelling fiscal or external pressures to act. Research limitations/ application. The issues identified are ones that many countries seeking to introduce value-based recurrent property taxes will face and puts forward how they can be tackled. The case study countries are middle income ones with relatively well developed infrastructure, which low income countries may lack. Practical implications. The solutions to overcoming the barriers to value-based recurrent property taxes encountered in the case study countries are ones that are applicable to many other countries, who can learn from their experience. Originality/ value. The paper provides a perspective on overcoming the issues encountered in introducing value-based property taxes from the viewpoint of those who have been involved in working out ways of overcoming them and so provides insight that is a useful addition to the literature.
Research undertaken by the World Bank in Europe and the Central Asia Region indicates that there are four principal preconditions for introducing value-based recurrent property tax reforms: comprehensive property registration, a reliable source of data about the prices achieved in transactions, a valuation infrastructure that complies with internationally-recognized standards, and an efficient tax collection system. In spite of the arguments in favor of value-based recurrent property taxes, many countries raise revenue from recurrent property taxes using an area basis, and most countries raise relatively little revenue from recurrent property taxes. The paper has been written according to both the dogmatic-legal method and comparative method. It presents current solutions adopted in post-Soviet European countries in order to draw out recommendations and suggestions for Poland. The original reasoning for the paper is that, amongst many scientific papers concerning thorough debate of property tax systems, few have focused on post-Soviet countries and the issues that arise in transition countries. Most concern Western European or North American countries with different economies, politics, institutions, and histories to the Eastern ones. Authors of the paper believe that the article can fill the gap in discussions on the shape of the property tax system reform in Poland and the reforms carried out in Eastern Europe countries.