innovative land and property taxation
chapter 06
Transfer taxes are another important group of taxes that are applicable in a majority of countries. They are only collected when changes of property owners occur and individual valuations are commonly used to establish taxable values. Some respondents have indicated that mass valuation results can also be used to establish amounts due for collection as transfer taxes. Most countries in the UNECE region also charge capital gains tax. There are also examples of taxes being levied on abandoned or neglected houses and building or underdeveloped sites. Most responses indicate that land and other real estate taxes are collected through a single common tax. In these cases, values of land and improvements are often calculated separately with both assessments made at the same time. A proportion of the total tax that is related to land depends on the market values in the geographic area where the property is located. It is common that all types of properties are subject to taxation. In most countries nonprofit facilities, public infrastructure facilities, public real estate, forest and farmland, nonproductive land and real estate located in special economic zones can be subject to tax exemptions. A small number of countries reported no tax exemptions (tax exemptions may also be applied to different groups of the population). Finally, the report also found that local authorities are responsible for the establishment of land and real estate tax rates. Tax rates are commonly established according to national legislations and regulations. In a significant number of countries, national authorities set the tax rates. In many countries local authorities also have rights to set land and real estate tax rates. In nearly all such cases, the tax rate ranges within certain intervals that are typically set by national legislation. Most responses indicate that taxpayers have the right to appeal against assessed tax values of land 74
or real estate. Commonly the appeal is first directed to the assessing agency and if it is not satisfied the appealing party might go to court. Sometimes the time to make an appeal after the taxable value is established is limited. And some countries do not have appeal procedures in place. Although the replies indicated that mass valuation activities are mostly financed by national authorities, land and real estate taxes collected usually constitute the revenue of local authorities. It is also common that this revenue is divided in proportions between different levels of governments. Replies also indicate that different types of taxes levied on land and real estate may contribute to the revenue of different levels of government. 6.3 Taxation as an Instrument to Improve Equity: The Role of Housing Finance Systems
After the publication of the study on mass valuation, the WPLA continued to promote cooperation on topics related to taxation. Taxation issues were addressed in such publications as the guidelines on housing finance, which has contemplated the incorporation in land administration systems of certain provisions to guarantee fairness in the distribution of wealth through taxation on land and real estate, or the creation of subsidies to promote affordable housing for all sectors of the population. The UNECE Committee on Housing and Land Management, of which the Working Party is a subsidiary body, works also on issues pertaining to land management and has recently published a series of guidelines on housing finance, which were prepared to assist countries in transition to create a market for mortgages in the housing sector. The publication also addressed the need of government intervention to guarantee affordable housing for all: “after the first steps in the transition process have been accomplished, the question of how to increase affordability of housing gains is of