Property Valuation and Taxation for Fiscal Sustainability – Lessons for Poland

Marek Walacik,Richard Grover

doi:10.2478/remav-2019-0004

Abstract

Abstract 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.

Highlights

Value-based recurrent property taxes can make an important contribution to the efficient functioning and fairness of a tax system
Recurrent taxes on property are relatively neutral as they fall on accumulated wealth rather than influencing future behavior (NORREGAARD 2013)
They can encourage the productive use of land in order to generate an income with which to pay the tax burden (MALME, YOUNGMAN 2001), thereby discouraging land hoarding and the keeping of land idle

Summary

Recurrent property tax capacity in the European Union

Faced with these apparently compelling arguments, one would expect value-based recurrent property taxes to be heavily used. Many taxpayers who could afford to pay a higher tax rate are not required to do so, and the potential yield is low As this can have adverse consequences for the economy and for the fairness of the tax system, it raises the question as to why countries do not make greater use of value-based recurrent taxes. Despite the fact that introducing a cadastral tax in Poland is the subject of debates and discussions among both scientists as well as state officials and politicians, so far there is no widely accepted idea of this task This is despite the current system deisincentivizing the proper allocation of capital and space, and its equity raising widespread doubts. This is despite the current system deisincentivizing the proper allocation of capital and space, and its equity raising widespread doubts. (RENIGIER-BIŁOZOR 2017) The introduction of the legal possibility of differentiating tax rates based on the area of real estate has failed miserably

Preconditions for successful recurrent property tax reform

Resistance to property tax reform

Findings

Conclusions