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Taxes on land and property exist all over the world in many forms
and are an important source of finance for local governments. The
extent to which local governments have control over property taxes
is often an important determinant of their ability to make
autonomous expenditure decisions. This comprehensive Handbook
explores case studies of land and property taxation in 25 countries
(five in each of five regions - OECD, central and eastern Europe,
Asia, Africa, and Latin America), and focuses on the potential
contributions of the property tax to the revenues of urban and
rural governments and to more efficient land use. Introductory
chapters highlight the diversity in the application of land and
property taxes among the countries. Major policy alternatives with
respect to taxing land and property are discussed, including the
choice of tax base, exemptions, methods of determining the tax
base, tax rates, differential treatment of different classes of
property (such as farms, residences, commercial properties), and
the process of tax administration. Other taxes levied on land, such
as land transfer taxes, development charges and unearned increment
taxes, are also reviewed, as is recent experience with property tax
reform in a number of countries. This major reference work will
provide a valuable resource and necessary addition to the libraries
of government officials, municipal associations, property
assessors, international agencies, teachers and students of public
finance.
The Canadian province of Ontario has found it difficult to get the
property tax "right." One reason is that its property tax is not
one tax, but two: a tax on residential property and a tax on
business. These two taxes differ in their political dimension and
economic impact, and in how they are administered. Tax reform has
been a particular challenge because the local
governments--municipalities, regions, and school boards--depend
heavily on property tax revenues compared to other local funding
sources.This book examines the broad reform of the Ontario property
tax in 1998. The objectives of this reform included introducing a
full market value assessment, establishing a property tax system
that would be widely accepted, and removing property tax reform
from the provincial political agenda. Although the reform effort
was lauded by experts at the time, its overall objectives were not
achieved. In fact, the new assessment system may have ultimately
weakened the role of the local property tax. Good property tax
design needs to recognize the important differences between taxing
housing and taxing business property. Revenue from the property tax
alone is not sufficient for large urban areas to pay for the range
and level of public services for which they are responsible. The
paths to improving the property tax--for example, abolishing the
heavily discriminatory taxation of business property--would leave a
major revenue hole in local budgets. The question is how to make up
for this gap. The authors consider two approaches to the problem:
restructuring education finance and introducing a new form of
business taxation, at both the provincial and local levels. Over
the past decade Ontario was able to successfully adopt a uniform,
province-wide market value assessment system. However, its
experience suggests that when reforms in property tax
administration are combined with sound reforms in both property tax
policy and some aspects of local governance and finance, they are
more likely to bring about the desired benefits.Many jurisdictions
around the world have been advised to implement major reforms in
property taxation to resolve local government finance problems.
This detailed evaluation of Ontario's reform in both property tax
policy and full market value assessment shows that, while such
reforms are possible, they require very careful design,
implementation, and sustained follow-up if they are to succeed,
especially in large metropolitan areas.
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