2.5 Advantages and Disadvantages of the Property Tax as a Sub-National Tax
In looking at property tax in developing countries it was put forward that there was a greater need for the revenues that are derived from this type of tax to finance the expenditure of the local government therefore a heavy reliance is placed on it (Bahl and Martinez-Vazquez 2007). The advantages discussed are: revenue potential and stability, fairness and equity, compliance costs, tax base competition and land use efficiency. While the disadvantages discussed in regards to property tax are: administration cost and enforcement.
2.5.1 Advantages
Revenue Potential and Stability
The potential of property tax as a significant revenue producer for local governments is
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The higher the property values the more benefits are received by the taxpayer in that area this may be businesses or residential properties, thus the benefit is proportion to value. In developing countries, there is a large disparity between the rich and the poor and the ownership of property is heavily concentrated among the wealthy. Landlords are often not reached by the income tax system as they can easily disguise their income; hence property tax has the potential of filling the gap (Bahl and Martinez-Vazquez …show more content…
The value of land and improvements is not a tax base which the central governments want; therefore it is best to leave it to local governments (Bahl and Martinez-Vazquez 2007). Land Use Efficiency
A property tax might be thought of as a charge for land that can lead to significant improvements in the quality of land use. If the land is taxed according to its location, value in urban areas, and if assessment is at its highest and best use, a more rational allocation of land use will occur. Hence the land value version of property taxation has a particular advantage (Bahl and Martinez-Vazquez 2007).
2.5.2 Disadvantages
Administration
Compensation must be provided to the person whose property is being bought. Each country should work to set a standard for what is a fair market price, to prevent any people from inadequate compensation. The value of the property must be taken into account, and the effect this will have on their way of life. If a person is, for example, losing their home, the government must provide enough money to ensure that individual is able to relocate comfortably.
Netzer, D. (1973). The incidence of the property tax revisited. National Tax Journal, 26(4), 515-535.
Briefly explain the statement "Fairness of taxation is increased when more kinds of wealth are included".
Because of the amount of overdeveloped areas that are now vacant, the desire to renovate old vacant properties and land plots has all but disappeared. What if there was a beneficial solution to unused land plots in need of rehab and redesign? What if, instead of paving over every leftover inch of grass and dirt in urban areas to make room for more parking for our daily commuting polluters, we instead reinvent that land for a purpose that is both beneficial to our
A BID is defined as, “[a]n organization of property owners in a commercial district who tax themselves to raise money for neighborhood improvements” (Cullingworth, 387). Assessments are then made mandatory and collected by the city. Thus, funding does not come by way of the federal government, but city’s can utilize grants to help fund their efforts. In this way, the federal governments support the community economic development, but takes no direct efforts in funding the programs. The city’s then offer incentives, in the form of tax exemptions, to attract developers. In turn, new construction would create jobs and lower unemployment. Theoretically, the encouragement of a tax incentives is to stimulate the economic growth of an area with higher unemployment rates. The problem is many developers tend to gravitate towards the city’s that can offer greater incentive. Officials have wondered if these programs benefit the cities with the greatest
In Mexico City and other urban areas it is common to see shacks and shoddy houses right next to the gleaming mansions of the upper class. This is because of spatial inequality which is when money or resources are not divided equally in an area. It causes some places within that area to become richer or poorer than others. Spatial inequality in urban areas is usually caused by rapid migration from rural parts of the country. They migrate because they hope to find jobs and raise their standard of living.
Market value is not the only measure which is fair to everyone, but The Fifth Amendment protects you against self-incrimination. And by making this law the property owner has a right to notice of the government's decision and an opportunity to respond, and to just compensation for the land taken. the government defines "just compensate" that means " is the fair market value of the property at the time of the taking contemporaneously paid in
People commonly believe that property values decline when blacks or non-whites move into a neighborhood. However, the real reason why property values decline is because of whites moving away and taking their resources with them. White homebuyers fear that property values will decline rapidly when nonwhite residents begin moving into a neighborhood. What they do not take into consideration is that the nonwhite residents may be their socioeconomic equals. Instead, they focus on race—they categorize individuals into socioeconomic classes on the basis of race.
cents” (Morris 23). According to this information, urban sprawl is costing tax payers in areas of
According to a summary by the Texas Legislative Council, the amendment would increase “the portion of the market value of a residence homestead that is exempt from ad valorem taxation for public school purposes from $15,000 to $25,000.” (8) An analysis by the Dallas Morning News observed the amendment as translating to a $120-130 a year relief for the average Texan. (Garrett) Additionally, the proposed amendment also increases the exemption amount for elderly or disabled persons. Finally, the amendment would also allow the Texas legislature to prohibit the reduction or elimination of a tax exemption imposed by the governing body of a political subdivision. (House Research Organization 5) A hearing on the measure was held by the Texas House Ways and Means Committee on May 12, 2015. (Proposition 1 Hearing) Based on the hearing, I believe the North Texas Tea Party and the Texas State Secretary Office (among others) are for the measure. Some opponents of the measure included the Center for Public Policy Priorities, the Texas Taxpayer Research Organization, and the Texas Association of Business. What arguments for an against the amendment do these contenders
The disadvantages of having no state income is that everything around people increases in price. Just because the state does not receive a percent from worker’s earnings, does not mean they do not find other ways to tax them. As a result the state imposes taxes through other ways to receive money. Their is higher property taxes, higher than average expenses, and less state funding. A study by Lincoln Institute of Land Policy says “Effective property tax rates on owner-occupied housing in Texas are the fourth-highest in the United States and about 58 percent above the median rate for all state.”
For the federal government to condemn property as blighted and then transfer it to private developers or corporations for the obvious purpose of increasing tax revenue is seen as being unfair and unconstitutional. The Constitution designates to Congress a list of specific enumerated powers. These powers can be found in Article I of the Constitution, which contains some important items. These powers range from things like declaring war, raising armies and collecting taxes. It also includes powers that are of secondary importance such as regulating the value of foreign coin and establishing post roads.(Baude, p1746) However, the power of taking private property is not c...
“Real estate is land, all of the natural parts of land such as trees and water, and all permanently attached improvements such as fences and buildings. People use real estate for a wide variety of purposes, including retailing, offices, manufacturing, housing, ranching, farming, recreation, worship, and entertainment.” (Answers.com) In order to more specifically focus on a specific area of real estate this discussion will deal with the housing industry of real estate. In this discussion, when housing is analyzed it will be in the realm of rental real estate.
On the one hand, participatory approach to land use planning can provide openings for the decentralized administration of land management and enhance legal protection of local land rights through contributing to formal recognition of existing land tenure systems. According to Chigbu et al, (2015) four functions of land use planning that directly links to tenure security. (1) Its capacity to identify or determine land areas, parcels and uses and users. (2) Its propensity to enable documentation of land areas, parcels, rights, restrictions and responsibilities. (3) The opportunities it provides for stakeholder involvement, compensation of claims and community participation. (4) Its impact on land value, land markets and credit opportunities. On the other hand, land use planning, promoting sustainable natural resource use and environmental management are generally part of the mandate of local governments. And these prerogatives often tend to be weakly developed, both legally and with respect to capacity building and methodology (Hilhorst 2010). Unclear property rights and tenure insecurity are the major constraints to the potential of successful land use planning. According to UN-Habitat (2008, p. 17), poor land use planning associated with insecurity of tenure and incompletely specified land rights leads to problems of air and water-borne pollution from agricultural and industrial land use. Though there is a