Start Date
30-10-2017 8:45 AM
End Date
30-10-2017 10:00 AM
Description
The paper presents the results of a project carried out the World Bank and FAO to identify the lessons learned from property tax reforms and good practice that could be shared. The research was primarily based on nine country case studies (Albania, Kazakhstan, Lithuania, Moldova, Poland Serbia, Slovenia, and Turkey with the Netherlands as a comparison) at varying stages in the development of value-based recurrent property taxes. Property taxes in the emerging economies of Europe have tended to be based on area for land and buildings or a notional depreciated or book value of buildings. They are widely but typically relatively lightly used. The result is that local governments are often heavily dependent on inter-governmental fiscal transfers at a time when many national governments are under financial pressures. This has led to governments turning to bodies like the World Bank for assistance in undertaking property tax reforms. Moving to value-based property taxes requires capacity to estimate market values of properties and this has been a major impediment. The successful innovators established a valuation infrastructure prior to introducing mass valuation. They also found ways of discovering and recording accurate transaction prices. Good systems of property registration were needed to ensure that tax rolls were comprehensive. They developed efficient billing and collection systems and had regular revaluations to capture part of any value increase. The problems encountered in property tax reforms are not just due to their technical demands, but also reflect the difficulties in finding effective champions in government and overcoming public opposition. In three of the case study countries, well-developed systems have either been left incomplete or not been implemented because of lack of political support or because opponents have sought to block the changes on the grounds that they were unconstitutional. These show that successful reform programmes need to build public support and to demonstrate that they satisfy public demands as the technical merits are not by themselves sufficient to make the case for change.
Publication Date
October 2017
Recommended Citation
Grover, Richard and Anand, Aanchal, "Achieving successful implementation of value-based property tax reforms" (2017). International Research Symposium. 1.
https://researchexchange.iaao.org/irs/irs17/sessions/1
Achieving successful implementation of value-based property tax reforms
The paper presents the results of a project carried out the World Bank and FAO to identify the lessons learned from property tax reforms and good practice that could be shared. The research was primarily based on nine country case studies (Albania, Kazakhstan, Lithuania, Moldova, Poland Serbia, Slovenia, and Turkey with the Netherlands as a comparison) at varying stages in the development of value-based recurrent property taxes. Property taxes in the emerging economies of Europe have tended to be based on area for land and buildings or a notional depreciated or book value of buildings. They are widely but typically relatively lightly used. The result is that local governments are often heavily dependent on inter-governmental fiscal transfers at a time when many national governments are under financial pressures. This has led to governments turning to bodies like the World Bank for assistance in undertaking property tax reforms. Moving to value-based property taxes requires capacity to estimate market values of properties and this has been a major impediment. The successful innovators established a valuation infrastructure prior to introducing mass valuation. They also found ways of discovering and recording accurate transaction prices. Good systems of property registration were needed to ensure that tax rolls were comprehensive. They developed efficient billing and collection systems and had regular revaluations to capture part of any value increase. The problems encountered in property tax reforms are not just due to their technical demands, but also reflect the difficulties in finding effective champions in government and overcoming public opposition. In three of the case study countries, well-developed systems have either been left incomplete or not been implemented because of lack of political support or because opponents have sought to block the changes on the grounds that they were unconstitutional. These show that successful reform programmes need to build public support and to demonstrate that they satisfy public demands as the technical merits are not by themselves sufficient to make the case for change.