Based on the experience and work with LSGUs, CEA as a partner in the USAID project Strengthening Resource Mobilization Activity, identified a number of challenges and barriers related to the system of property tax (PT) administration at LSGU level. These challenges directly contribute to the reduced efficiency in the collection of PT as well as to the gap between the budgeted (planned) and realized (collected) property tax revenues, and making use of the potential for property tax revenue collection.
In order to assess the bottlenecks associated with administrative barriers that cause inefficiency in the overall process of property tax administration, we review the identified challenges based on the practical application of the regulatory framework and the experience of the LSGUs, providing suggestions for potential improvements/changes in the regulatory framework, for the process of administration and property tax management and marginally to the management of fiscal revenues in general at the local level.
The key findings for the identified barriers:
- Most frequently the municipalities apply the lowest property tax rate
- Variation in property tax share in municipals’ own source revenues
- Property tax revenue share from natural persons is a significantly larger than the revenue collected from the legal entities
- Municipalities’ rate of actual property tax revenue collected compared to budgeted revenues (collection rate) vary significantly
- Essential system deficiencies in real estate registers weaken the tax capacity of the municipalities
- Limitations of inter-institutional connectivity/operability affect the timely and appropriate valuation of the property (tax base)
- The practical implementation of the methodology for market value assessment of the real estate is faced with difficulties
- Delaying the process of (re)valuation of the tax base has a negative long-term effect
- Rural vs. urban LSGU differences in expense and revenue of property tax administration
The full document with Executive Summary in ENGLISH: Оценка на ефикасноста на тековниот систем за администрирање на данокот за имот
