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Property tax has not saved local budgets, - according to IRN with explanations by Tatyana Polidi, Executive Director, IUE

Дата публикации: 14.01.2019

For two years the citizens of Russia have been paying property tax – for their apartments, houses and land plots. Tax assessment takes place based on cadastral value, which is close to the market one.

As Tayana Polidi, Executive Director, IUE, explains, local authorities in Western countries have a more stable source of revenue and fewer benefits. They are given more leeway to set their own tax rates, and they are less reliant on senior levels of government, while the property tax is more market-based … “With a steady source of revenue at hand, there comes an understanding how to finance the costs associated with  road repairs, rehabilitation of networks and utilities infrastructure”.

In Russia “municipal budgets retain few taxes, revenue is taken away by ‘higher’ budgets, where redistribution takes place, and the local budget never knows how much it will get the next year”, observes Tatyana Polidi. In total property taxes the corporate property tax accounts for around 80%, while land tax and individual property tax together represent only 20%. “As a result, the largest property tax in a town, generated by local real estate – corporate property – is, in fact, unavailable to a local budget”, notes Tatyana Polidi. The expert considers that revenues from corporate taxes should be remitted to local budgets.