Theoretical concepts of property tax, an essential source of local government revenue in Europe

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The article explores the problems of theoretical aspects of local tax system rationalisation. The deliberations conducted concern possibilities of referring recommendations made by the contemporary theoretical achievements describing economic effects of property taxation to the tax practice of certain European countries (for example Poland). The content of the article indicates that conclusions resulting from the theory of property taxation should support the operational transformations of the local tax system..Having analysed influential studies on property taxation the author expresses his opinion that despite essential differences, both approaches (benefit view and capital view) have a great value. It should be stated, however, that we have to do with the tax which is not a pure tax on benefit because the owners of property, while improving it, are charged with higher taxes, being thus discouraged from any investments. Simultaneously, benefits resulting from social and economic programmes conducted at the local level are reflected in the local property value. The article applies the method of analysis and literature criticism as well as the intuition method.