Property Tax Revenues Research Articles

Determinants of Property Tax Revenue: Lessons from Empirical Analysis

Many developing countries have struggled with realizing sufficient revenues from property tax. However, as developing countries experience economic growth, they are also seeing property values rising, providing a bigger tax base from which to realize revenues. Technology has made tax administration easier and more effective and developing country governments have been improving their quality of governance and considering introducing or enhancing property tax revenue collection to diversify their tax and fiscal revenues. This paper explores the determinants of property tax revenue using data from the United States, Canada, Australia, Chile, and the Organisation for Economic Co-operation and Development for 2006 to 2016, using a fixed effects model. The results show that increases in gross domestic product and population lead to increases in property tax revenue and an increase in federal transfers decreases it. The outcomes of the empirical analysis highlight the statistically significant impacts on property tax collection of a country's state of development and its demographic, fiscal, and property tax–specific characteristics. A critical question for further research is whether and how the empirical methodologies and specifications as applied to the set of developed economies would be replicated in the context of developing countries.

Take the Q Train: Value Capture of Public Infrastructure Projects

Transit infrastructure is a critical asset for economic activity yet costly to build in dense urban environments. We measure the benefit of the Second Avenue Subway extension in New York City, the most expensive urban transit infrastructure project in recent memory, by analyzing local real estate prices which capitalize the benefits of transit spillovers. We find 8% price increases, creating $6 billion in new property value. Using cell phone ping data, we document substantial reductions in commuting time especially among subway users, offering a plausible mechanism for the price gains. The increase in prices reflects both higher rents and lower risk. Infrastructure improvements lower the riskiness of real estate investments. Only 30% of the private value created by the subway is captured through higher property tax revenue, and is insufficient to cover the cost of the subway. Targeted property tax increases may help governments capture more of the value created, and serve as a useful funding tool.

Distributional Impacts of State and Local Tax Policy in a Heterogeneous-agent Model

This article presents a dynamic heterogeneous-agent life-cycle model with housing demand to evaluate the economic implications of reforming US state and local personal tax structures. Because of the extensive reliance of state and local governments on income, sales, and property tax revenue, those three taxes are explicitly modeled to generate a baseline and varied to evaluate alternative policy proposals. The results of the model show that the sales tax burden falls evenly across the distribution of income earners, while the property tax burden falls more heavily on the highest income earners. By design, the model’s income tax is progressive, so the tax burden shares rise with income. Results also show that the property tax generally improves utilitarian social welfare relative to income and sales taxation, but the magnitude of these gains depends on the availability of a state and local tax deduction on federal income taxes.

Imbalance in local revenues from property taxes in Poland versus local infrastructure expenditures

The imbalance in the public finance sphere is equated with the budget deficit, when the inflows to the local budgets do not cover the expenses. In the article, the imbalance is understood in two ways: as the deficit of property tax revenues, in relation to the public expenditures for purposes directly related to the infrastructure that increase the value of a property or change its purpose; and as a spatial imbalance in the amount of revenues in the individual territorial self-government units. The second approach will examine the disproportion of tax and per capita spending broken down into urban, rural and urban-rural communes, as well as the search for the causes of disproportions in the level of tax revenues. The aim of the study is to indicate a permanent budget deficit within the meaning of earmarked expenditure (income from property tax - expenses on real estate infrastructure) in the surveyed units, and a strong differentiation of this deficit in the three groups of local government units examined. The study will use the data from public statistics and methods of multidimensional analysis. The obtained results may be another argument in favor of introducing ad valore tax in Poland, as well as implementing the concept of activity-based budgets, and prescribing generic inflows to expenditures on related purposes.

OWN REVENUE POTENTIAL AND THE TAX POLICY OF COMMUNES ON THE EXAMPLE OF COMMUNES OF THE MAŁOPOLSKIE PROVINCE

The aim of the article was to indicate the importance of the category of own revenue potential and diagnose its level and changes in various economic conditions. The importance of revenue from property tax in shaping the revenue potential of communes was also assessed. The subject of the study were basic categories of commune revenue. The estimation of the average level of analysed features, their differentiation and changes in the analysed period was made with the use of descriptive statistical methods, such as location, variability and dynamic measurements. In the analyses measures of central tendency such as: arithmetic mean, median, standard deviation, quartiles and the correlation coefficient were used. Own revenue potential constitutes a stable source of revenue for commune budgets and is most resistant to economic changes. Property tax revenue plays an important, albeit decreasing role in own revenue potential. Research has shown that together with an increase of fiscalism in the scope of this tax, the value of stable sources of income of communes also increases, which boosts financial independence. At the same time, communes with a high level of per capita income potential applied a higher level of property taxation, especially on buildings related to business activities.

Constitutional Aspects of Local Taxes in the Slovak Republic and in the Czech Republic

The main aim of the paper is to analyze the constitutional backgrounds of the local taxes´ legal regulation, assessment, and collection in the Slovak Republic and the Czech Republic. The paper starts with the general constitutional regulation of taxes and continues with the critical analyses of local taxes´ regulation and application in both countries. It follows the legal power of legal norms, starting with the international aspects – the European Charter of Local Self-Government, continuing with the constitutional issues and finishing with the statutory regulation of local taxes. The first part of the hypothesis that even if the constitutional regulation in these countries is very different and gives different opportunities for the local taxes adoptions both in national Parliaments and in local councils, the practice in both countries is very similar, was (with a small difference in the actual use of given possibilities to adjust the real property tax revenues by the municipalities, which speaks in favour of the Slovak ones compared to the Czech) confirmed. However, the second part of the hypothesis that in both countries local self-government units do have adequate powers to impose and collect local taxes was rejected. In the conclusion, the comparison between the Czech Republic and the Slovak Republic is made and possible changes de lege ferenda are presented.

Spatially-variable property tax and optimal tax composition in congested monocentric cities: George, Pigou, Ramsey and Strotz unified

We explore the optimal spatial structure of the property tax in a monocentric city with transportation congestion. To show how the availablity of revenue instruments impacts the properties of the optimal property tax, we discuss three regimes with different combinations of a head tax, congestion tolls, and property tax. In each regime, the tax composition is optimally determined to finance a predetermined expenditure. Under the first regime, with all the three taxes available, the first-best allocation is achievable only when the property tax is unused. Under the second regime, where only head and property taxes are available, a spatially variable property tax substitutes for the unavailable congestion tolls; the head tax (or subsidy) fills the gap between the property tax revenue and the predetermined expenditure. Moreover, property tax is negative (positive) close to the city center (boundary). Under the third regime, where only property tax is available, the role of the property tax is twofold: to substitute for the unavailable congestion tolls and to finance the predetermined expenditure. In general, for both roles, the optimal tax rates are spatially variable. Furthermore, if its role as a substitute for congestion tolls dominates its other role, the property tax may be negative close to the boundary.

House prices and immovable property tax: Evidence from OECD countries

AbstractThis paper studies the impact of changes in immovable property tax revenues on the growth rate of house prices by analysing a panel of 34 OECD countries over the period 1970–2014. Starting from the annual series of immovable property tax revenues, we isolate years of significant shifts in the property tax regime and study their impact on house prices. We find a strong negative relationship between increases in immovable property tax revenues and house prices. This relationship is robust to the inclusion of cyclical determinants of house prices, country and year fixed effects, and country‐specific linear trends. We also propose an instrumental variable strategy based on countries’ legal origins that confirms a statistically significant negative impact of such taxes in the short run.

Nebraska mayor unhappy with mental health center's location

The mayor of Bellevue, Nebraska, is warning that his city could lose property tax revenue if county officials move ahead with their choice for the site of a new mental health crisis center, The Associated Press reported Feb. 19. The nearly seven‐acre property near Nebraska Medicine‐Bellevue would be better used for private development because of its drive‐by visibility, Mayor Rusty Hike told the Omaha World‐Herald, adding that the city of Bellevue would lose out on potential revenue if the tax‐exempt crisis center is built there. “There's got to be a better spot for it without hurting the city's finances,” he said. Hike became mayor after the November election and said development will be a focus of his administration. “Bellevue has been notorious for not bringing in development and wasting our limited pieces of ground,” Hike wrote in a Facebook post about the crisis center's location. “We cannot keep thinking this way.” Sarpy County Board officials hope the center will alleviate the burden on hospitals and the county jail by acting as a short‐term emergency facility where people can voluntarily receive mental health and substance abuse assessments.

The Impact of a Potential Public/Private Initiative on a Defined Region of the South Suburban Chicago Metropolitan Area

The university is considered one of the engines of growth in a local economy or its market area, since its direct contributions consist of 1) employment of faculty and staff, 2) services to students, and supply chain links vendors, all of which define the University’s Market area. Indirect contributions consist of those agents associated with the university in terms of community and civic events. Each of these activities represent economic benefits to their host communities and can be classified as the economic impact a university has on its local economy and whose spatial market area includes each of the above agents. In addition are the critical links to the University, which can be considered part of its Demand and Supply chain. This paper contributes to the field of Public/Private Impact Analysis, which is used to substantiate the social and economic benefits of cooperating for economic resources. We use Census data on Output of Goods and Services, Labor Income on Salaries, Wages and Benefits, Indirect State and Local Taxes, Property Tax Revenue, Population, and Inter-Industry to measure economic impact (Implan, 2016).

Residential taxable value recovery in coastal Mississippi after Hurricane Katrina

ABSTRACTThe resilience of local fiscal resources is an important missing component of community recovery after disasters. We know little about how quickly or fairly broad-based taxable economic activities return to pre-disaster levels. For example, property tax revenue, typically heavily dependent on residential properties, is commonly the largest source of General Fund revenue for local governments in the United States. Because residential properties are frequently impacted by natural hazards, understanding the linkage between housing and fiscal resilience is critical. Yet there exist very few broad-based studies of housing recovery. This paper helps fill that gap by evaluating housing recovery in a coastal portion of the U.S. state of Mississippi after Hurricane Katrina. We find that while the influence on housing values of Hurricane Katrina’s flood and wind damage dwindled over time, race and income remained salient factors in the level of recovery of single-family homes and their taxable values.

Per Pupil Spending and Poverty’s Persistent Penalty: An Empirical Analysis of 2016 District-Level NCES Data

It remains largely uncontested that students from low-income households—as well as the schools they attend—require additional resources to offset the challenges low-income students typically confront relating to access to equal educational opportunity. Federal elementary and secondary education programs, including Title I, supplement financial resources for students in poverty and schools that serve high concentrations of low-income students. Because federal programs operate within a complex, multi-level school finance system, however, tests of their ability to offset student poverty’s “penalty” require empirical approaches that reflect the school finance system’s multiple layers. Results from this study—which draw from 2016 school district-level data, focus on three common per pupil spending metrics, and exploit multilevel regression models—suggest that a student poverty penalty persists and is robust to multiple per pupil spending approaches. While these findings generally comport with prior and related empirical research, less clear, however, is what can be plausibly inferred from these findings. To some degree a persistent student poverty penalty is one, perhaps inevitable, artifact of the nation’s traditional reliance on local property tax revenues for elementary and secondary public school funding. Alternative explanations include inconsistencies in how various states and school districts implement Title I. Whatever the cause (or causes), the persistence of a student poverty penalty—and the discomforting challenges it poses to the equal educational opportunity doctrine more generally—warrants similarly persistent careful study and policy attention.

How Does Governance Modify the Relationship between Public Finance and Economic Growth: A Global Analysis

How Does Governance Modify the Relationship between Public Finance and Economic Growth: A Global Analysis

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

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.

Analysis of Taxation of Property in Bosnia and Herzegovina

The purpose of this paper is fill in the literature gap and to analyse taxation of property in Bosnia and Herzegovina (BIH). By using IMF and OECD methodology defined under taxes on property, our research tries to compare taxes on property in two BIH entities to the international practice. The results are twofold: firstly, inconsistencies to international classification of taxes on property in BIH are identified and secondly, the taxation of property differs in two BIH entities (RS and FBIH). We find that three different types of property taxes are applied –tax on immovable property in RS and real estate transfer tax and so called tax on property in FBIH. We also find that identified differences have an effect on the size and share of revenues from property taxes in both entities which affect local communities and their revenues. Hence, we focus on property taxes in FBIH since they are under cantonal jurisdiction. The research shows that most revenues from property taxes in FBIH are collected in Sarajevo Canton. In fact, most property tax revenues in Sarajevo Canton come from real estate transfer tax revenues and are collected in four municipalities forming the City of Sarajevo. Bearing in mind lack of reliable long term data in both BIH entities related to taxation of property, we conclude with a few policy recommendations and suggestions for future FBIH property related reforms which should in turn simplify the process of property taxation in FBIH and improve the position of local communities in FBIH.

Sources of Revenue and Government Performance: Evidence from Colombia

I study whether governments financed through taxes are better governed than those relying on non-tax revenue. Focusing on Colombian municipalities, I leverage variation in property tax revenue and natural resource royalties arising from cadastral updates and fluctuations in the world price of oil. Additional tax revenue has a larger effect than a same-sized increase to oil royalties on local public goods in the areas of education, health and water, despite earmarking of royalties for this purpose. Higher tax revenue also reduces the probability of a disciplinary prosecution against the municipal mayor, while the opposite is true for royalties.

TAX ADVANTAGES OF LOCAL BUDGETS AS AN INSTRUMENT OF FINANCIAL CAPACITY OF TERRITORIAL COMMUNITIES

Purpose. The article is devoted to the study of the structure of tax revenues of local budgets as an instrument of socio-economic development, analysis of the provision of local budgets by their own sources of income, revealing and substantiating directions for increasing the financial capacity of territorial communities. Methodology. Recommended by the Committee of Ministers to member states indicators of financial autonomy of local authorities are calculated and analysed for Ukraine in comparison with some European countries. A retrospective analysis of revenues of local budgets in Ukraine and the world in 2013-2017 was conducted. The tax base for property different from the land plot in 15 regions of Ukraine in 2013-2017 is investigated. Results. The significant predominance of transfers over tax revenues in the structure of local budget revenues was revealed. It is substantiated that the growth of own tax revenues of local budgets is directly related to the increase in the volume of income taxes on the property. It is proved that one of the most powerful instruments of the socioeconomic development of regions is projects taking into account the growth of taxes. It was revealed that the unwillingness to massive use of the latest financial instruments of economic development does not contribute to the dissemination of positive global experience in the development of regional infrastructure and expansion of the tax base. In Ukraine, the tax base of property tax is not related to the value of the property but depends on its size and area, which significantly differentiates the approach in other countries of the world. In view of this, local authorities, while ensuring the development of local infrastructure, should be interested in creating a new housing stock, timely putting it into operation, having in its structure a certain share of dwellings with large areas (which will increase the tax base) and business property. Practical implications. Potential property tax can be enhanced through the use of the method of tax increment financing that will enable finance local infrastructure by future revenues from this tax. Value/originality. According to the fact that Ukraine has no clear relationship between the level of development of local infrastructure and property tax revenues, but mainly evident dependence on the quantity and quality of housing and business development, job creation in the territory, it is advisable (during the preparation of institutional environment to attract financial and legal instruments for territorial development), methodologically we feel being right to satisfy not only gains tax revenues and property tax revenues and increased tax revenues per natural persons (due to the increase in the number of jobs) and a single tax (due to an increase in entrepreneurial activity in the region). The further use of this method of financing infrastructure projects and the possibility of its impact on regional tax base in Ukraine will require the development of guidance and methodological framework for the implementation of this method, including mechanisms for providing and transferring funds, method of calculation of future tax revenue guarantees for such projects to all interested stakeholders, Treasury services for such projects, etc.

House prices and property tax revenues during the boom and bust: Evidence from small‐area estimates

AbstractAlthough the Great Recession put the US economy into a tailspin, we know little about how the changes in house prices influenced property tax collections. Using local‐level housing data from Zillow® matched to property tax data from 1998 to 2012, two questions are examined. First, the elasticity of property tax revenue with respect to house values is estimated. Second, the timing of this elasticity is determined. The analysis rules out that local policymakers capture the entire increase of house value in property tax revenues but unable to rule out that increases in house values are completely offset by changes in effective property tax rates. Decreases in values have an elasticity between 0.3 and 0.4 and take three years for changes in values to impact property tax revenues. While property tax collections declined, local policymakers adjusted effective millage rates such that revenues did not decline as much as home values.

PERENCANAAN PENGELOLAAN PENDAPATAN ASLI DAERAH SEKTOR PAJAK BUMI DAN BANGUNAN PERDESAAN DAN PERKOTAAN DI KABUPATEN BLORA

This research background is property tax management authority transfer by center government to local government according to the laws of local tax number 28 in 2009. The purpose is to make government financial independently and increase local revenue in property tax sector. Problem of that condition is local government must be set up many supporting factors, that is human resources especially property appraisal, computer and server tools, operating system and data base, compatibel files and service room, and exist budget to implement intensification and extensification tax program. Readiness of supporting factors are very influence optimization level of property tax revenue. According that condition, this research purpose is to analyse property tax management in Blora Regency so that from result of analysing can be arrange scenario planning which is consider uncertainty situation in future. Collecting data method of this research use Miles, Huberman, and Saldana method (2014), while scenario planning analysis use TAIDA method from Lindgren and Bandhold (2003). Result of this research is Government of Blora Regency has not maximaly implement property tax management yet. That condition based on empirical fact which is only one man appraisal to analyse NJOP with more than 500 thousand property tax object in Blora Regency. That situation cause property tax revenue not accordance with real potension.

Endogenous Taxation in Ongoing Internal Conflict: The Case of Colombia

Recent empirical evidence suggests an ambiguous relationship between internal conflicts, state capacity, and tax performance. In theory, internal conflict should create strong incentives for governments to develop the fiscal capacity necessary to defeat rivals. We argue that one reason that this does not occur is because internal conflict enables groups with de facto power to capture local fiscal and property rights institutions. We test this mechanism in Colombia using data on tax performance and property rights institutions at the municipal level. Municipalities affected by internal conflict have tax institutions consistent with the preferences of the parties dominating local violence. Those suffering more right-wing violence feature more land formalization and higher property tax revenues. Municipalities with substantial left-wing guerrilla violence collect less tax revenue and witness less land formalization. Our findings provide systematic evidence that internal armed conflict helps interest groups capture municipal institutions for their own private benefit, impeding state-building.