Framework for the developing of the legal and administrative structure for implementing an ad valorem property tax in Poland

The report demonstrates the feasibility of creating an ad valorem based property tax systems for Poland and demonstrates the usefulness of setting up market monitoring systems for countries in transition to help stimulate the development of markets and provide the basis for real estate valuation. The report includes an assessment manual which addresses administrative management and structural issues, as well as a draft law and discussion paper. The main conclusions are as follows. (1) The conversion of the existing property tax to a value base could significantly increase revenue to the self governing units of the government. This has many desirable side effects such as supporting decentralization of services and permitting a lowering of the income tax rates. A simulation done for Kracow showed that an ad valorem based property tax could support 34-40% of the budget as compared to 24% currently. (2) In Kracow, the market for land and apartments is operating efficiently and as a result it is feasible to use mass appraisal methods to implement a value based property tax. (3) An automated fiscal and legal cadastre like the prototype operation in Kracow is a desirable model to implement throughout Poland and all countries in East Europe and the NIS. (4) The market monitoring project, in addition to supporting valuation for ad valorem purposes, provided valuable side effects that could speed up the development of all real property markets; similar projects should be started throughout Poland and other parts of Eastern Europe. (Author abstract)