Fiscal autonomy of municipalities in the context of land taxation in the Czech Republic

Abstract

The polarity of views on land taxation in the individual EU Member States gives rise to an interesting comparison and finding a base that would capture the strengths of different approaches. This paper aims to assess the impact of legislative changes and land values on land tax imposed. The paper also provides a description of tax developments for each type of land in the Czech Republic, based on time series of tax imposed. The research is based on the evaluation of the secondary statistical data of the Czech Statistical Office and the Financial Administration of the Czech Republic, as well as the information obtained during the primary research. Immovable property tax revenues are low compared to other EU countries. Unlike most other states, the Czech Republic mainly uses the unit method of determining the tax base on the basis of the land area. Only for some types of land certain system of taxation is being used. As concluded from the analyses, it was verified that there is no difference in the development of the tax imposed between the types of land with value and unit tax base. The value method of tax assessment in the Czech Republic is determined by the quality of the land fund valuation and does not reflect the real market value of land. Revenue from land taxation generates income for municipal budgets more or less in all EU countries. The tax rates are set by law and the amount is the same for all municipalities in the Czech Republic. The municipality can affect the amount of revenues mainly through coefficients and the local coefficient can be considered as yet the most effective tool. As follows from the analyses, it was verified that the local coefficient did not significantly affect the land tax imposed and this is especially due to the fact that this coefficient was introduced only in less than 10% of municipalities. Current tax instruments in the context of land taxation are not very effective in the Czech Republic, and municipalities use them only to a limited extent.