Property Tax

An International Comparative Review

William McCluskey

• Publisher: Taylor & Francis
• Year: 2018
• Print ISBN: 9781138362895
• eBook ISBN: 9780429777196
• Edition: 1
• Topic: Negocios y empresa
• Subtopic: Negocios en general

First published in 1999, this volume aims to add to the existing body of knowledge with regard to application of ad valorem property taxation in various countries. To this end, the present volume has essentially focused on updating, revising and extending the coverage of material included in the earlier book, 'Comparative Property Tax Systems'. The contributors discuss issues including property tax in Singapore, Ireland, Pakistan, Poland and Cyprus.

1 Introduction: a comparative evaluation

William McCluskey and Brendan Williams

Introduction

The main purpose of this chapter is to compare and contrast several of the principle elements relating to ad valorem property tax systems. What is clear from the findings presented in this book are both the broad similarities and the significant differences between countries’ systems. This dichotomy is however, more apparent than real as each tier of government with an interest in property taxation is essentially trying to achieve one specific goal, that of revenue generation. In some instances the subsidiary issues of land policy, land development, environmental aspects and income redistribution can also be influenced to varying degrees through the implementation of local property taxes.

This chapter by its very nature can only hope to provide a macro-level analysis, but it does provide and permit a robust comparison of some of the essential features of the real property tax. For a more in-depth study the chapter reviews provide a wealth of information based on local expert knowledge.

Local fiscal autonomy

In terms of a local financial system it has to be recognized that no single set of financial circumstances will serve all purposes (Layfield, 1976). The first and most vital component is local accountability, meaning that the government, whether central or local, should be accountable to the electorate. The issues of local autonomy and local accountability are closely related, in that one of the principal reasons for giving local government a measure of fiscal discretion is to improve or encourage local accountability (Owens, 1992). This results in the local electorates being empowered in terms of influencing the mix of available taxes, fees and charges, thereby encouraging and promoting a more efficient allocation of resources at the local level. It could be argued that local accountability and locally determined expenditure should be passed on to those residing in a local authority and availing of local services either through property taxes or service charges. It is clear, therefore, that this can best be effected if local authorities have their own tax resources. It tends to follow then, that there is a case to meet the cost of local services primarily through locally based revenue, as opposed to central funding such as grants, etc. It can of course also be argued that central government grants can be essential in terms of equalization to ensure that there is parity of services delivered between different jurisdictions. Service charges and fees have the attraction of ‘let the user pay’, therefore the benefit is directly related to the charge, notwithstanding that user charges tend to be insufficient to cover the full economic cost of the services provided.

Range of local taxes

In essence to give a measure of credibility to their status as autonomous entities and to enhance local accountability local governments need to have a strong source of own fiscal revenues. Most countries would tend to have only one or two major local taxes even though others could be incorporated within the fiscal package. There are essentially four main tax options for local government, namely:

1 an increase in existing local taxes such as tourist taxes or dog licensing taxes;

2 an assignment of a central tax such as income tax to the local level;

3 introducing a local sales tax such as VAT; and

4 either the introduction or extension of an ad valorem tax.

Table 1.1 gives a brief summary comparing the likely impact of the range of taxes across a specified set of criteria.

Principles of a good local tax

The canons of taxation were initially formulated by Adam Smith and published in his book ‘Wealth of Nations’. These principles or maxims postulate that:

• ‘The subjects of every state ought to contribute to the support of the government, as nearly as possible in proportion to their respective abilities.’

Table 1.1
Evaluative characteristics of local government taxes

Criteria	Income Tax	Sales Tax	Property Tax	Tourist Tax
Yield	H	H	H	H
Fairness	H	H	H/M	M
Accountability	M	M	H	L
Administration Costs	H	H	L	M
Equity	H	M/H	M/H	L
Efficiency	H	M	H	L
Avoidance	H	L	L	M/H

H = high; M = medium; L = low

In terms of equity this would imply that people should contribute to the finance of the state or jurisdiction according to their means. Whereas income is indicative of ability to pay, the ownership of real property may not be, unless it is held as an investment and generates an annual income.

• ‘The tax which each individual is bound to pay ought to be certain and not arbitrary. The time of payment, the quantity to be paid, ought to be clear and plain to the contributor, and to every other person.’ To a large extent both personal income tax and property taxes would comply with this canon.

• ‘Every tax ought t...

Table of contents

• Cover
• Half Title
• Dedication
• Title Page
• Copyright Page
• Table of Contents
• Figures and tables
• List of contributors
• Preface
• Acknowledgements
• 1 Introduction: a comparative evaluation
• 2 Singapore property tax system
• 3 The property tax system in Hong Kong
• 4 Rating in Malaysia
• 5 The present and future role of property taxation in local government funding in Ireland
• 6 Real property taxation in Pakistan
• 7 Property tax in Thailand
• 8 Immovable property taxation in Cyprus
• 9 An analysis of local government finance in Botswana
• 10 Property taxation in Zimbabwe
• 11 Property tax systems in The Netherlands
• 12 Decentralizing property taxation: the Philippine perspective
• 13 The property tax system in Brazil
• 14 Rating systems in New Zealand
• 15 Property taxes in Australia
• 16 Property taxation in South Africa
• 17 Real property taxation in Kenya
• 18 Land value taxation in Estonia
• 19 Unimproved land value taxation in Jamaica
• 20 Real property taxation in Poland
• 21 Local property taxation in Hungary
• 22 Property taxation in the Czech Republic
• Index