Paper/Speech Details of Conference Program for the 16th NISPAcee Annual Conference Program Overview V. Working Group on Public Sector Finance and Accounting Author(s) Lucie Sedmihradska University of Economics of Prague Praha Czech Republic Bryson Phillip, Title The Property Tax and Local Finance in the Czech Republic File Paper files are available only for conference participants, please login first. Presenter Abstract We usually think of property tax as the tax on immobile property. In the Czech Republic, however, it also includes an inheritance tax, a real estate transfer tax and, finally, a road tax. We will focus in this paper on the traditional property or real estate tax. First, the Czech law on real estate tax will be reviewed in the context of the central government’s administrative concerns with that tax. The government’s views of what the tax is and what it should accomplish are important as a basis for understanding the policy possibilities and limitations of the property tax. The actual role of the property tax in the fiscal development and fiscal decentralization of the Czech Republic since 1993 will be briefly reviewed. The degree to which resources have been shared and transferred for the benefit of subnational levels of government, the initial successes of fiscal decentralization and the impacts of the reforms of public administration as a prelude of the entry of the Czech Republic into the European Union in 2004 will also be briefly reviewed. The failure of fiscal decentralization to achieve greater autonomy for Czech local governments will be addressed. Finally, the current situation of the real estate tax will be evaluated on the basis of the criteria given in the Working Group’s research protocol. Discussion in the western countries since the beginning of the transition from central planning to markets has emphasized the necessity of fiscal decentralization and the positive potential aspects of the property tax in this process. But little has been done in the Czech Republic during this period to move away from a rather limited, nearly purely symbolic property tax, to one which would provide some degree of fiscal autonomy to local governments subject to central authority for the provision of both funds and fiscal mandates for the use of such funds. But the discussion goes on in the Czech Republic. Recently, it has included such developments as a proposal to abolish the tax on agricultural land and to give more discretion to the municipalities, ideas which to this point have only been approved in a limited version. It has long been an implicit intent (if generally not frequently discussed one), to introduce a value-based property tax. This idea has remained one for the future. There is currently no active discussion about moving away from the traditional coefficients-based approach to real estate valuation, although the real estate market in Prague and in other attractive localities is functioning well at this point. As one would expect, much of the country is lagging behind in real estate market development, which would make the prospects of market valuation more tentative for the near future. With the beginning of the current year, a start has been made toward the deregulation of housing rents, which may be seen as a part of the general process of change that leads ultimately to fiscal decentralization. This paper will be written from the perspective of fiscal autonomy for the Czech municipality. The Czech parliament and the Czech Finance Ministry have always been sympathetically inclined to the idea of permitting municipalities whatever autonomy is manageable for them. Their usual small size and limited resources implies to Czech central authority that there is a clear limit to how much autonomy the Czech cities and towns are capable of managing. But specific law and policy outcomes have tended to devolve decision-making prerogatives very slowly. At the same time, local governments have shown a strong preference for receiving grants or for a greater share of tax revenues rather than the right to increase local taxes themselves. The paper will review some of the results of a recent survey of local Czech authorities on the question of the administration of the property tax.
