Transcript Macedonian Property Tax

Property Taxation Reform in
Macedonia - Towards 2005
Presentation to the World Bank Workshop on
“Innovations in Local Revenue Mobilization”
June 22, 2002
Andy Anstett
Institut International de la fiscalité immobilière
International Property Tax Institute
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Local Government Reform
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Macedonia decentralizing government in
interests of better governance and under
Ohrid Framework Agreement that ended
hostilities in August 2001
New Law on Local Self Government came into
force Jan. 1, 2002
Drafting new laws on local government
finance, property tax and other local taxes &
fees for 2005
New local gov’t territorial division in fall 2003
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Existing Property Tax System
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Responsibility for administration of all “local
taxes” to municipalities in 2005
Currently national public revenue office (PRO)
administers property tax, but local
government receives revenue under complex
formulae
Existing law has some good features but,
property tax administration is a mess.
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Existing Property Tax System
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Disparities in the capacities and performance
of PRO regional offices
Tax base is poorly defined and poorly
registered in land and fiscal cadastres
World Bank funding to MK cadastre authority
for new real estate cadastre
Valuation procedures differ dramatically from
region to region and are poor
Tax billing and collection are very poor & no
enforcement is done for property taxes
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Towards 2005 - Initiatives Underway
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MoF and four cities have agreed to pilot
projects in property tax administration 4
regions (25 of 124 municipalities)
Brokered by ZELS (Association of Macedonian
Units of Local Self-Government)
Intensive work with the Tax Department of
the Ministry of Finance in developing and
passing a new property tax law by Oct. 2003
In 2004, rolling out the models of property tax
administration developed in the pilots, in line
with the new law, effective January 2005, to
all other jurisdictions for 2005 taxation
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Towards 2005 - The Property Tax Pilots
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Municipalities have desire but not the staff
resources or infrastructure to take over local
taxes – property, transfer, inheritance & gift
Bureaucratic delays in getting started - MOU
signed May 30, but contained surprise
expansion of scope to include all communal
(utility) fees and charges
Delegation agreements under article 23 of law
on Local Self-Government between mayors
and PRO delayed - week of June 23?
Delays in getting access to records at cadastre
and Ministry of Interior
Delays in printing 2003 tax bills
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Towards 2005 - The Property Tax Pilots
IMPLEMENTATION
Governance issues - city / region steering
committees of mayors
Database comparsions for updating real
property records – new vs. old cadastre issues
Updating movable property records from
registration data – Ministry of Interior issues
Improving real estate market research and
analysis and expanding application of
valuation commission data – formal vs
informal real estate markets
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Towards 2005 - The Property Tax Pilots
IMPLEMENTATION (continued)
Tax bill printing and delivery, including
supplementary tax bills for “found”
assessment
Ending dual claims for residential deduction
Public information campaign about municipal
role and municipal benefits
Collection and enforcement issues - including
reminder notices for unpaid taxes
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Towards 2005 - Proposed Legislative Changes
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Ministry of Finance created working group in
early June with broad representation
Workshop - June 11 to 14, 2003 proposed:
removal of the property tax exemption for
real property owned or used by businesses
removal of the property tax exemption for
construction land - both vacant land and
improved with buildings
abolition of the movable property tax
municipal rate setting power within
statutory ranges for all local taxes
capping the 50% residential deduction
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Towards 2005 - Proposed Legislative Changes
(continued)
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a new first degree and second degree
appeal process to be developed by Ministry
of Local Self Government
abolition of self-assessment
Valuation Commissions responsible for
assessment
inclusion of enforcement provisions for local
taxes in LLSG or LLGF
taxing all state property in private use
ZELS to be consulted on appropriate ranges
for communal fees and charges.
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Towards 2005 - The Challenges & Risks
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Political momentum behind decentralization is
hugely dependent on the success of the pilots
Work in pilots presents great logistical,
analytical and political challenges
Legislative changes increase complexity of
transition to 2005
For example, end of business exemption
creates need for sophisticated valuation
capacity
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IPTI
IPTI is an international non-profit organization of
property tax professionals representing
government, taxpayers, academia and taxation
& assessment professionals.
IPTI’s Mission: To internationally promote and
foster property taxation and assessment ideals
founded upon the general principles of fairness
and equity within the partnership of
practitioners, governments and taxpayers
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IPTI’s Main Goals:
foster equity and exchange of ideas within the
property tax profession
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promote dialogue with various professional
organizations relevant to the tax industry
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facilitate provision of timely and innovative
solutions to internal and external industry needs
through networking and co-operation among
key international experts
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IPTI’s Main Goals:
assist "global" companies in promoting
fairness and equity of assessment
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serve as a voice in assessment and tax
policy;
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educate the tax professionals, government,
and private industry
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promote and facilitate contacts among our
members
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