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Taxation of property Best Practices :

Country USA

Question 1) How Much Money Does the Property Tax Generate and How is it Spent?

Answer 1 In 2010, Washington State taxpayers paid a total of $8.8 billion in property taxes to local governments, state government and school districts. 1.1 Property taxes are the largest source of tax revenue for local governments, generating about $4.4 billion in 2010. The property tax is the fourth largest source of revenue to the state General Fund, generating approximately $1.9 billion in the 2010 fiscal year, including in-lieu taxes, or about 13 percent of General Fund revenue.

2) What Property is Taxable?

2 State Constitution defines property as everything that can be owned, whether tangible or intangible. The property tax is applied annually to the assessed value of all property unless it is specifically exempt by law. The Constitution requires that taxes be uniform within a class of property. For property tax purposes, there are two broad classes of property, real and personal. Real property consists of land and buildings, structures, or improvements that are affixed to the land. In general, everything else is referred to as personal property.

2.1 Exempted motor vehicles, household goods, and personal effects from the property tax, only personal property used in business is subject to the property tax. 3)What are the Major Exemptions from Property 3 Constitution allows the Legislature to exempt Tax? types of property; it does not allow the Legislature to exempt property based on its owner. 3.1 The largest exemption is for intangible property. This includes money, mortgages, notes, accounts, stocks and shares of corporations, trademarks, trade names, patents, copyrights, trade secrets, franchise agreements, licenses, etc. 3.2 Other exemptions include business inventories, household goods, most personal property, retired persons, churches, nonprofit hospitals, private schools and colleges, and agricultural products. 4.1 The exemption for intangible property was originally granted by the Legislature in 1925 and has been amended several times, most recently in 1997. 4.2 The exemption for business inventories was passed by the Legislature and phased in over ten years, beginning in 1974. 4.3 Motor vehicles were exempted from property tax in 1937, when the current motor vehicle excise tax was enacted. 4.4 Computer software was exempted in 1991

4) When Were These Exemptions Granted?

4.5 Exemptions for agricultural products were subject to legislative changes in 1973 through 1984 when the current exemption for all such products was enacted. 4.6 Private schools and colleges were exempted by the Legislature in 1925. 4.7 The State Constitution authorized other exemptions, such as exemptions for governmental entities, a $15,000 exemption from tax on personal property for sole proprietors, and property tax exemptions for retired persons. 5) What Types of Property Tax Relief are Available to Retired Persons? 5.1 Property tax exemptions are available to retired persons who meet income requirements and are retired. Exemptions include total exemptions for excess levies (voter-approved property taxes) or partial exemptions from regular levies. 5.2 Exemption Program Homeowners 61 years of age and older may apply for an exemption from paying excess levies if their household income is $35,000 or less. The property tax relief is available for taxes payable in the year after the application is made and every year thereafter. They are also exempt from regular levies on a portion of their home value if their income is $30,000 or less. A further benefit for these homeowners with incomes of $35,000 or less is that the taxable value of the property is frozen when the

homeowners becomes eligible for the program. 5.3 Deferral Program A related program allows homeowners at least 60 years of age with household incomes of $40,000 or less to defer payment of all property taxes. These taxes may be deferred until the sale of the property or until the property ceases to be the permanent residence of the homeowner or surviving spouse. 6) What Types of Property Tax Relief are Available to Low-Income Persons? 6.1 Deferral Program property tax deferral program for households with a combined disposable income of $57,000 or less. This program is similar to the existing property tax deferral program for retired persons, but the new program has no age or retirement due to disability requirement. Under this new deferral program, eligible homeowners of any age may defer one-half of the property taxes and special assessments imposed on the homeowners primary residence, if the first half taxes and assessments are paid by the April 30 due date. To qualify, the homeowner must have owned the residence for at least five years. The total amount of taxes deferred under this program may not exceed 40 percent of the homeowners equity value in the property. 7.1 A current use assessment for open space,

7) What are Current Use Valuations and

Open Space?

timber, and agricultural lands. Although not a tax exemption in the strict sense of the term, current use valuations reduce the tax burden on certain properties. 7.2 The assessed value is based on how the property is currently used, rather than the market value (or the highest and best use) of the property. The open space program allows agricultural lands, timberlands, and other open space lands to be assessed according to their value as they are currently being used, rather than the market value. This current use value is typically much lower than market value and is, therefore, a tax benefit for the property owner. Open space lands are lands which conserve natural resources, promote conservation, enhance public value and recreation, preserve visual quality, or have other legislatively identified attributes which are of public benefit. Agricultural and timber lands are subject to various requirements regarding size, use, and income. 8.1 Uniformity in Taxation The most important principle of property taxation in the state is the uniformity of taxation. Congress imposed a strong requirement for uniformity in taxation in order to prevent the

What Types of Restrictions and Limitations are There on Property Taxes?

territorys residents from imposing a disproportionate share of taxes on nonresidents. This means that taxes must be the same on real property of the same market value. Uniformity requires both an equal rate of tax and equality in valuing the property taxed. 8.2 One Percent Limit (Ten Dollar Limit) In 1972, Washington State voters amended the Constitution to limit the annual amount of property taxes that may be imposed on an individual parcel of property to one percent of its true and fair value. By law, tax rates are stated in terms of dollars per $1,000 of value. Therefore, the 1 percent limit is the same as $10 per $1,000. Under the constitutional amendment, the one percent limit ($10 limit) may be exceeded only with the approval of 60 percent of the districts voters. 8.3 The Limit (Inflation) Factor Local government taxing districts generally determine their property tax levy based on the revenue required to fund their budget for the following year. Legislature imposed a statutory limit on annual increases in local governments revenues from property taxes. Under this limit, revenues from any districts regular property tax levy may not exceed 106 percent of the highest amount of revenue received from any levy in the preceding

three years. Under this provision, taxing districts with a population over 10,000 were only allowed to increase the regular levy by the rate of inflation or six percent, whichever was smaller. There are three criteria used to value real property: comparable sales, cost, and income potential. Comparable sales: value is determined or estimated based on multiple sales of similar properties. Most residential property is valued using this method. Cost: value is determined based on the cost of replacing an existing structure with a similar one that serves the same purpose. This method is used to value new construction. Income: value is determined based on the income producing potential of the property. This method is often used to value business property. Legislature adopted a property revaluation cycle, requiring that revaluation occur a minimum of every four years. A taxing district levies a property tax in the amount needed to fund its budget for the following year. By November 30th of each year, the amount of taxes to be levied by taxing districts are certified to the County Assessor who computes the tax rate necessary to raise that amount of revenue. The County Assessor calculates the tax rate necessary by dividing the total levy amount by the amount of taxable

How is Assessed Value Determined?

How is the Amount of Tax Levied by a Taxing District Determined?

property in the district. This number is expressed in terms of a dollar rate per $1,000 of valuation. For example, a rate of $0.00025 is expressed as 25 per $1,000 of assessed value. There are three main components to the property tax; the levy, assessed value, and levy rate. The levy is the total amount collected from the taxpayers by a taxing district. Currently, the taxing districts are only able to increase their levies by 1% per year. The assessed value and the levy rate are the tools that are used to distribute the property tax burden equally to all taxpayers. Assessed Value x Levy Rate = levy The tax on a particular property is calculated by multiplying its assessed value by the tax rate The rate is expressed in terms of dollars per $1,000 of assessed value. The rate is multiplied by each $1,000 in value for each parcel to determine the tax. An individual tax bill is the total of all such calculations for all of the individual districts levying tax on the particular property. All property, except new construction, is assessed on its value as of January 1 of the assessment year and is listed on the tax rolls by May 31. For new construction, the value as of July 31 of the tax year is listed on the rolls. Notices of valuation changes are mailed to the owner of the property.

How are Individual Property Taxes Determined?

How is Property Assessed and the Tax Collected?

The treasurer in the county where the property is located collects property taxes. The treasurer is required to send each taxpayer a notice which must include the amount of tax owed, the value of both real and personal property, and the name and amount for each taxing district levying a tax. The county treasurer mails the tax bill to the taxpayer listed on the tax rolls, which may be a lending institution in cases where the property owner has provided that taxes are to be paid from a reserve account administered by the lending institution. The Washington State Constitution established basic education as the states paramount duty. This duty has been reaffirmed in subsequent statutes and court decisions, which acknowledge that the state must provide sufficient aid to local school districts to fund basic education. Currently, almost one-half of the state General Fund budget is spent for public schools. As mentioned earlier, the state property tax levy is dedicated for public schools and is frequently called the state school levy. The revenues are paid directly into the General Fund, along with all the other tax revenues that go to the General Fund.

Are Public Schools Funded from the Property Tax?

What are Some of the Recent Legislative Changes to the Property Tax?

Property taxation system

Issue Any taxation systems should;

The power to tax

property taxes may be classified

Object of the property taxation

In property taxation, there are two most common tax bases. These are value and area bases. In value based systems, usually market value of

answer i) serve clearly defined social objectives; ii) raise significant amount of revenue; iii) be exclusively under the control of the government authority; iv) be administered in a way that public understands and sees as fair; v) be relatively simple and cheap to collect; vi) be designed to make it difficult to avoid making payments; vii) distribute the tax burden equitably across the community; viii) encourage the good use of resources. may rest with the central government, regional or local governments, or both. Generally, a countrys constitution would establish basic taxation powers. In most of the countries the power to tax property rests with the central government. However, all or a portion of property tax revenues are assigned to local governments, the central governments may give local governments some power to set tax rates, to decide which properties are to be taxed, and to grant exemptions and property tax relief beyond that called for in national legislation broadly into annual and incidental taxes. Taxes levied annually on property are seen wealth tax in every country. The annual levy may be based on the estimated market value for which the property would sell under normal circumstances, or the assessed rental value of the land or property, or in some countries area of the property. Incidental taxes arise because a specific event triggers the tax, such as the sale of the property, or its change to more valuable use could change from a country to another country and it may be defined as the land alone, the buildings alone, or the land and buildings together. Also, the liability for the tax may lie with the owner or the occupier; the buyer or the seller (MUNRO 2000). Property tax exemptions are granted by central, state or local governments. It may be based on various factors such as ownership, the use of the property, or on characteristics of the owner or occupier. estimating market value of the property, three most common valuation approaches are practiced. These are comparison approach, income

the property is considered.

approach and cost approach. The comparison approach is the simplest way to estimate the market value of the property is to identify another property that has recently sold and which has identical characteristic. If there is no identical property in market for comparison, the cost approach or income approach is applied. In the cost approach, the market value of the property is arrived at as follows: Estimated reproduction or replacement cost of the building new, less estimated occurred depreciation, if any, plus estimated land values. It may be used in service and special purpose buildings, some types of industrial buildings, certain kinds of rental projects. In the commercial or industrial property valuations, income approach is applied. It is used to determine of the market value of the property by capitalizing its net operating income at a rate stemming from similar type properties which have been sold. The other tax base is area of the property. If using of market value in tax assessment does not possible, usually area based system is preferred. Under area based property tax systems, taxes are determined simply by multiplying a measurement of area by a rate. As pointed out by ALMY (2001), area-based systems have the advantage of being simpler to administer. In these systems, only area measurements are needed. They are easier to implement, because market data do not have to be collected and analyzed. They are also more objective than value-based systems, in that area measurements are less contestable than value estimates. On the other hand, area-based property tax systems are less fair. For example, highly desirable properties pay the same taxes as undesirable properties. by local or central governments and in many countries local governments levy rates that differ by property class. Different tax rates may be imposed for different classes of property (residential, commercial, and industrial, for example). This system gives local governments the power to manage the distribution of the tax burden across various property classes within their jurisdiction in addition to determining the size of the overall tax burden on taxpayers

Property tax rates are determined

(BIRD and SLACK 2002). They may be fixed legislation; annually adjusted for inflation or determined based on budgetary needs. If rates is determined based on budgetary needs, the amount of total budget of administration, total amount of estimated non-property tax revenue and the amount of total assessed value are needed. Land management can include farming, mineral extraction, property and estate management, and the physical planning of towns and the countryside. It embraces such matters as; i) property conveyance, including decisions on mortgages and investment; ii) property assessment and valuation; iii) the development and management of utilities and services; iv) the management of land resources such as forestry, soils, or agriculture; v) the formation and implementation of land use planning; vi) environmental impact assessment; vii) the monitoring of all activities on land that affect the best use of that land is categorized as urban land policy and rural land policy. The general purpose of the urban land policy is to harmonize the individual ownership and the public interests on the land and also prevent using land against to public interest. The property taxation is the most efficient fiscal instrument in both urban land policy and in rural land policy. Whether taxation is arranged and applied for land management purposes, it will adjust and provide discipline in land markets. Functions of the property taxation for the land management process, such as: To increase urban land plot supply and so, decreasing urban land prices, to taxation of unbuilted urban lands. To prevent property speculations and establish social justice, to taxation of underutilized properties. To control, protect and prevent density of settlements in sensitive areas, such as historically and environmental areas, to

The land policy

taxation of the lands in these areas. To support for maintenance and restoration of historical and artistic buildings by tax exemption. To adjust urban development, orient the demand from overdevelopment area to underutilized area.

To prevent illegal settlements by levy highly taxation rates on illegal buildings To apply property transfer taxation for prevent often transfer of property for speculative purposes. To protect agricultural attributes of rural lands by decreasing tax rates in rural areas. To provide community justice by taxing on increments value of properties that is the result of public investments and plan practices.

Land administration and property taxation

The benefits of land administration are outlined in Land Administration Guidelines. These are summarized as follow; i) guarantee of ownership and security of tenure; ii) support for land and property taxation; iii) provide security for credit; iv) develop and monitor land markets; v) protect state lands; vi) reduce land disputes; vii) facilitate rural land reform; viii) improve urban planning and infrastructure development; ix) support environmental management; x) produce statistical data. Land administration functions may be divided into four components; juridical, regulatory, fiscal and information management.

Turkey practice

In Turkey, property taxes are solely accepted a revenue source for local governments activities and their balancing and controlling functions have been not to take into consideration. In our country there is no tax structure which regulates property market. have been vested with limited authority to change tax rates and to give exemptions, but in Turkey local governments have not such authority to make arrangements about taxes. Nevertheless, tax revenue collected and shared by local governments

local governments

Turkey have been levied taxes on every building and land according to Property Tax Act. Property tax is calculated and levied depend on declarations stated owners by municipality. Declarations are composed of attributes data about property legal situation, such as ownership data, development plan data, address data and etc. property owner, owner of usufruct right, and if both are absent the person who use the property. The person, who is an owner of a shared property, liability of tax is limited as his share. In cooperation ownership, property tax liability of each owner spreads all of the property. has been given to public institutions and organizations, universities, municipalities, village legal personalities and etc due to type of their ownership, and also health, religious, transportation, infrastructure and other public services buildings due to their usage. These properties are out of taxation. Giving tax exemption is under the authorization of The Ministers Council. is accepted a tax base. Cost of building per square meter which is determined with the cooperation of Finance and Public Works ministries and parcel value which is estimated the Commissions of the Valuation are used for assessment of building tax value. Urban parcel tax value is

Tax payer is

tax exemption

In Turkey, tax value of the property

tax rate

computed according to unit value which is estimated with taking every local zone into account by Commissions of the Valuation. Agricultural land tax value is computed according to unit value which is estimated with taking soil types into account by Commissions of the Valuation in every county. Buildings and parcel tax value is increased according to half times of revaluation rate for every tax year. Revaluation rate can be used for making tax values update as explained in our laws. Revaluation rate which is computed by Ministry of Finance express annual changing rate in the Wholesale Price Indices is 0.1% for residence building, 0.2% for non-residence building, 0.1% for agricultural land and 0.3% for urban parcel. These rates are used two times in metropolitan areas. In addition to this, The Council of Ministers has authorization to decrease 50% and increase 30% of these rates that are determined in the act.

India practice 1.2 Overview of Reforms 1.2.1 Context: Property tax is one of the most important sources of revenue for urban local bodies (ULBs) in India. Property tax (also called general purpose tax or general tax) is a generic term, which not only include property tax but also include a variety of service taxes and cesses. Service tax includes water tax, sewerage tax, scavenging tax, drainage tax, conservancy tax, education tax, fire tax, education cess and tree cess. This PT tax structure differs from state to state in India and many states have problems related to the fixation of tax base and tax rate, tax assessment, tax collection, tax exemptions, dispute resolution etc. If assessed on the Annual Ratable Value (ARV) of land and building, it may include service taxes on water supply, drainage, street lighting etc. The ARV system of taxation which is a rent-based rateable valuation system where the annual value or the annual rental value of the property shall be deemed to be the gross annual rent at which the land or buildings might, at the time of assessment, be reasonably expected to be let from year to year.

Capital value reflects the markets assessment of the income to be derived from a property in future including income generated by more intensive use of the property. The tax base comprises the assessed value of land and improvements i.e., the value at which a willing buyer and seller would agree in a free market. It follows that the capital value is extremely elastic and the property tax will have a base that will grow with the economy. The unit area assessment (UAA) system is a simple arithmetical system of calculation of property tax based on covered area of the building and the unit area value or unit area tax for the category (of locality or amenity etc.) in which the premises is located through which it is possible for any citizen to self-assess his property tax and file his return form. In principle, the base of the property tax should respond to the increasing value of properties. In practice, there is growing evidence that this tax has not been a buoyant source of revenue. 1.2.2 Legal/Policy Issues: The ARV method of assessment was one of the most prevalent systems in India. 1.2.3 Management: Proper management of the property tax system is as important in improving revenue generation as improving the policy and legal framework of the system. These legal or management reforms have helped to rationalize the property tax system and increase revenues. These experiences can help to pave the way for improved practices and property tax revenue increase in the country. Hyderabad: A paper on Reforming Property Tax in Hyderabad (Mohanty, 2002) presents a critical analysis of the property tax reforms carried out in the city. It provides a number of lessons, some of which are: Some principles such as close involvement of tax payer, tax service linkage, incentives for filing tax returns, disincentives for non-filing, tax education etc. are important in designing of successful reforms. Arbitrary adoption of slab rates of tax in the name of elimination of discretion in the levy of tax is not desirable; Correction of inequities in the tax system can be an important source of enhanced mobilization of PT revenues; Tax education and organized publicity campaigns to address the psychology of taxpayer are more important than economic factors; Direct involvement of tax payers in the provision of civic services is a must for better tax compliance and Tax reforms may need to be pursued in an incremental manner.

Existing sistem The system of property tax assessment prior to 2001-02 was very complicated and in many ways irrational. Being based on notional rental value of properties, the assessed values were very low. Consequently, the AMC could only raise the tax rates, which stood at 73% of the annual ratable value in the case of residential properties and 83% for non-residential properties. Outcome of the low assessment of property values was that 72% of the total number of residential properties in Ahmedabad and 31% of the commercial properties were exempted from paying the general property tax. There was also enormous disparity between assessment of self-occupied and tenant-occupied properties. The ratio of tax burden was 1: 15 in favour of the former.

Present system Property tax is the second most important source of revenue for AMC. Especially after the elimination of octroi tax, property tax has become a very important source of revenue generation for the corporation. In order to utilize this source to the maximum of its efficiency, AMC administration understood the deficiencies of the existing system of property taxation and replaced it with an alternative more rational system. AMC initiated reforms in a phased manner to accommodate and minimize the legal and administrative challenges that are usually attached to reforms of this nature. A number of effective steps were taken to increase property tax collection with immediate effect. First, the municipal records of properties were updated and a large number of previously unrecorded properties were added. Next, all existing properties whose assessed value was grossly inadequate were reassessed. Finally, a number of punitive actions were taken against property tax defaulters. These included disconnection of water supply and drainage services; attachment of movable and immovable properties; and occasionally auction of properties for tax recovery. In the second phase of reforms, the AMC decided to evolve an areabased property tax system to replace the existing system based on annual ratable value. It was an elaborate exercise involving largescale survey of properties through out the city and computerization of data. Nearly one million properties were surveyed. Under the new formula, the property tax is computed by applying a per unit tax rate to the total carpet area of the property and adjusting

for location, age, type of use and whether the property is owner or tenant occupied. Assessment System The new assessment mechanism was adopted in the year 1999 provides that property tax shall be levied annually on buildings and lands on the basis of the rate per square meter of the carpet area. Multiplying factors giving weightage for: Location :( 4 gradations based on land value) Age :(5 gradations) Residential Properties: Type of building (5 gradations) Non-Residential Properties: Use of building (6 gradations) Occupancy :( Self Owned / Tenant) Property Tax = Area X Rate X Location factor X Age factor X Type of building or use factor X Occupancy factor. Other Rules (available) Updation In order for the new system to work effectively, it is very important that the property records, and other guidance values are updated at a regular interval. a) Owing to this, the property records are updated periodically. The last update happened in the year 2004 and currently, a zone wise updating of property records is being carried out. b) The guidance values were last revised in the year 2005 and it is decided that they would be revised every four years. c) However, recently the Govt. of Gujarat has adopted the method of revising land value records every year. Hence, frequency of revision of guidance value would be done on annual basis. However for doing so an amendment in the provisions of the BPMC Act will be required to be carried out.5

d) AMC has town planning & development department, which sanctions plans for new building constructions as well as addition/alteration in existing buildings. e) Moreover, town-planning department issues Building Use Permission to the new constructions. One copy of building plan approval as well as building use permission is sent to Property tax department for the purpose of assessment. f) Change of ownership / occupation is captured whenever any amendment for taxpayer's details is applied for. g) Also, the land values are usually identified from the Jantri (the year 2000) i.e. the ready reckoner used for the assessment of stamp duty on property transactions. h) Due to the very recent revision of Jantri, the new values have not been amended in the property tax bills for year 2008-2009, the new land values are expected to be used from the next billing cycle i.e. from April 2009. Billing and Collection System The property tax bills are raised at the Head Office of AMC for all the properties and are subsequently sent to the zonal offices for collection purposes. Mode of payment can be through Cheque Credit card Bank- As an innovative approach, AMC has partnered with a private bank (Kalupur Commercial Bank), which gives the citizens an added ease and option to pay their property tax bill at the nearest branch. Thus, bills can be paid at the 24 civic centers in the city and 13 bank branches. Internet: www.egovamc.com Recovery measures for default / delay in payment of property tax

leads to Disconnection of water supply connection Disconnection of sewerage connection Sealing of property Auction of property Exemptions Type of Exemption Qualifying Institution /individual Property Tax Non - Residential exempted by Religious Pla assigning Zero usanctorum of such value to property places of worsh Revenue implication of exemption Rs. 80.60 lakhs per year

In the present property tax system exemption is not given to any type of property except religious places where property tax is exempted only for the area of sanctorum. Such properties have to pay water and sewerage charge. Thus no property is issued a bill of zero demand. Also, for closed and unused building, 3/4 property tax is exempted. Benefits from New System The various initiatives of AMC for increasing property tax revenues have shown impressive results. The initial drive to increase the properties in the tax net and actions against defaulters produced immediate results. The tax revenue income doubled within two years and has increased steadily since then. Another major jump came in 2001-02 when the new area based system was introduced. The property tax was de-linked from the Rent Control Act, which was thought by the

citizens as a very complex and irrational method to calculate property tax. Dispute of assessment was totally removed among old and new buildings. Self-assessment is possible and hence discretion availed by lower level staff and corrupt practices can be easily curbed. There are several tangible advantages of the new system. First being, the number of exempted properties came down drastically from 62% to 28%. The disparity between owner-occupied and renter occupied properties also went down from 1:15 to 1:2. In addition, there was an increased flexibility in increasing the tax rate every year. The most impressive of all these being, the number of litigations has become nil because of increased level of transparency. Reductions In The Number Of Litigation Cases-AMC Year 1999-00 2000-01 2001-02 Cases 42378 38500 Nil Due to rationalization of the property tax assessment system, the zone wise demand of property tax too went down with the implementation of the new system. Use of Modern Technology E-governance as a tool for Self Assessment of Property Tax and an Aid in Billing and Collection has played a very important part in the success of the property tax reforms carried out by AMC and hence, it forms an integral part of the system. In order to provide a very transparent process of assessment of property tax and hence avoid any discretion and litigation, AMC provides a tool on its website. This tool helps the citizens in self-assessment of the property tax on their

individual properties by plugging in very basic information. The user friendliness of the website and ease in navigation has made this a widely accepted initiative among the citizens. The following screen shots from the AMC website (www.egovamc.com) illustrate this tool. Apart from this, the citizens can also get the amount of property tax on their property assessed by going to any one of the 25 civic centers. Not only in the assessment of property tax, Egovernance also plays an important role in billing and collection of the same. The tool available on the website also helps in generating the annual bills and keeps the records of bills paid and those that are due. The use of same database throughout the entire system has also lead to increased amount of ease in data maintenance and management. Collection Ratio The collection ratio for last three year (2005-06 to 2007-08) shows increase in the property tax collection after the new carpet area based method adopted by AMC. Last three years figures show that growth in property tax collection is more than 100% of the current demand and with arrears, collection efficiency is also over 70%. Table with rates available) Issues Administrative Issues: The only issue that could evolve with time is that of administering around 5000-6000 properties by a single ward inspector. Not only is he responsible for hand-to-hand delivery of the property tax bills but also examines any changes in tenants or owners of the properties. He is responsible for reporting any changes or updates regarding the property and/or tenants of his particular ward. Thus, a single inspector in charge of these many properties may give rise to productivity and effectiveness issues in a long run. Thus there is a need to increase the staff and provide training to them.

Lessons Learnt The property tax reforms at AMC show that a rational, equitable, and transparent system of property taxation can be more acceptable to taxpayers while generating higher revenues for the ULB. To administer the system, an excellent database is essential. It is very important to ensure that the taxpayers are not inconvenienced by the procedures and facilities for obtaining information or making payments. There should be clear policies and rules to deal with tax defaulters and corrupt staff and these should be strictly enforced.