Search results

Australia’s Future Tax System (2009) among its recommendations identified the need for realignment of tax revenue across the tiers of government in Australia, as well as the need to raise additional revenue from land-based taxes. In achieving these objectives, this paper aims to examine the revenues generated from land and how capital gains tax may be reconceptualised as a value capture tax resulting from the rapid urbanisation of Australia’s cities. The development of a theoretical framework realigns the emerging rationale of a value capture tax, as a means for revenue to be divested from central government in the form of capital gains, to sub-central government as a value capture tax.

A qualitative research methodology comprising grounded theory and phenomenological research is used in undertaking the review of tax revenue collection from state land tax, conveyance stamp duty, local government rating and Commonwealth capital gains tax. Grounded theory is applied for constant comparison of the data with the objectives of maximising similarities and differences in these revenues with an analytical construct as defined by Strauss and Corbin (1990, p. 61).

The paper finds that realigning revenue from land-based taxes against the principles of good tax design provides greater opportunity to raise additional revenue to fund public infrastructure while decentralising revenue from central government. It provides an alternate mechanism for revenue transfer from central to sub-central government while conceptually improving own source revenue from value capture taxation as a new revenue source.

The limitation of this paper is the ability to quantify the potential increase that would be generated in the form of value capture revenue. It is demonstrated in the paper that capital gains tax took over 15 years for revenue generation to crystallise, a factor that would likely occur in the potential introduction of a value capture tax for funding transport infrastructure.

The pathway to introducing a value capture tax is through re-innovating capital gains tax as a value capture tax directly hypothecated to funding transport infrastructure that results in the uplift in values of the surrounding property from which revenue is raised.

This paper provides a new approach in contributing to funding the capital outlay of public infrastructure in lieu of central government consolidated revenue allocated through the Commonwealth Grants Commission. It provides a much-needed approach to decentralising revenue from the Commonwealth to sub-central government in Australia which has one of the most centralised tax systems in the OECD.

This study aims to test the effect of Seattle’s discontinuous sidewalk requirement, on the number of housing units per construction permit.

This study uses discontinuity linear regression (DLR) on a database of Seattle’s housing construction permits during January-2015 to January-2018, controlled by 51 socioeconomic, planning and geographic variables. The sidewalk requirement is continuous inside the designated urban villages; however, it is spatially and quantitatively discontinuous in the rest of the city: certain blocks at certain locations require sidewalks’ design and construction in permits with six or more housing units. DLR detects the effect of the discontinuity while controlling for a vast array of confounding variables.

The primary finding is that the discontinuous requirement reduces the number of housing units in about 75% of a housing unit per permit, which at the aggregate level amounts to around 335 fewer housing units during the period of analysis.

The database is relatively small, which has limited a more thorough specification process and robustness tests.

Besides directly testing the effect of a discontinuous in-kind development contribution, the research setup allows to discuss a wider, more structural problem: the possibility of contributions avoidance due to spatial substitution. In contrast, spatially continuous (i.e. city-level) contributions cannot be avoided by performing spatial substitution, and they are internalized by the housing supply side (market-neutral).

This study aims to evaluate the property tax base under the local government property taxation in Nairobi City and its implication on revenue adequacy of the city. Nairobi has grown both in population and in physical extent resulting to increased demand for urban services. The city faces challenges of adequate infrastructure service provision against increasing demand. Property taxation if fully exploited can be a major source of city government revenue, which has been dwindling.

Literature review of property tax bases in the world and examination of best practices was done to highlight the inadequacies of property tax base administration in Nairobi. Primary data were gathered through interviews of officers in Nairobi City involved in the land rating process. Secondary data were obtained through documentary search and field survey of the study area.

The study established that Nairobi relies on a dual system of taxation, namely, site value rating and area rating. Tax is on vacant land only and excludes improvements. There are many legal exemptions and administrative exclusions from the tax base. The property tax registers do not include all the taxable properties and there is no regular updating of the tax registers. Nairobi relies on an outdated valuation roll whose values have no relation to the current market values.

These factors have resulted to a narrow tax base, which affects the revenue potential of the city and its ability to adequately provide infrastructure services.

This is an original research, which relied mainly on primary data. To establish the property tax bases and the exempt properties in Nairobi, the researchers interviewed the officers at the Nairobi city land valuation and property management directorate using structured questionnaires. To address the third objective on whether the property tax base is complete and all-inclusive, the research relied on primary data. The research population was residential properties in Buruburu, Kilimani and Riruta areas of Nairobi city. The sample data on property details were collected from the Ministry of Land and Physical Planning (MLPP). The researchers then examined the records at the Nairobi City to evaluate whether the properties, which are registered at the MLPP, are charged land rates at the city level and at what amounts. This included properties under site value rating and area rating.

Buildings contribute significantly to CO₂ production. They are also subject to considerable taxation based on value. Analysis shows that while similar attributes contribute to both value and CO₂ production, there is only a loose relationship between the two. If we wish to use taxation to affect policy change (drive energy efficiency behaviour), we are unlikely to achieve this using only the current tax base (value), or by increasing the tax take off this current tax base (unlike extra taxation of cigarettes to discourage smoking, for example). Taxation of buildings on the basis of energy efficiency is hampered by the lack of current evidence of performance. This paper aims to model the now-obligatory (at sale or letting) energy performance certificate (EPC) data to derive an acceptable appraisal model (marked to market, being the EPC scores) and deploys this to the entire population of properties. This provides an alternative tax base with which to model the effects of a tax base switch to energy efficiency and to understand the tax incidence effects of such a policy.

The research uses a multiplicative hedonic approach to model energy efficiency utilising EPC holding properties in a UK jurisdiction [Northern Ireland (NI)] as the sample. This model is then used to estimate discrete energy assessments for each property in the wider population, using attributes held in the domestic rating (property tax) database for NI (700,000+ properties). This produces a robust estimate of the EPC for every property in its current condition and its cost-effective improved condition. This energy assessment based tax base is further used to estimate a new millage rate and property tax bill (green property tax) which is compared against the existing property tax based on value to allow tax incidence changes to be analysed.

The findings show that such a policy would significantly redistribute the tax burden and would have a variety of expected and some unexpected effects. The results indicate that while assessing the energy performance of houses can be a complex process involving many parameters, much of the explanatory power can be achieved via a relatively small number of input variables, often already held by property tax jurisdictions. This offers the opportunity for useful housing stock modelling – such as the savings possible from power switching. The research also identifies that whilst urban areas display the expected “heat island” effect in terms of energy consumption, urban properties are on average more efficient than suburban/rural properties. This facilitates spatial targeting of policy messages and initiatives.

Analogous with other studies, data deficiencies introduce the risk of omitted variable bias. Modelling of the energy efficiency in the sample is limited to property attributes that are available for the wider population of properties. While this limits the modelling exercise, it is a perennial issue facing mass appraisal worldwide (where knowledge of the transacted sample attributes generally exceeds knowledge of the unsold properties). That said, the research demonstrates the benefits of sharing data and improving knowledge of the housing stock, as taxation databases would be stronger, augmented with EPC-derived property attributes for example.

The EPC lead in time for wide residential coverage is likely to be considerable. The paper contributes to emerging literature and policy debate surrounding the effect, performance measurement and implementation of energy efficiency certification, through a greater understanding of the sectorial and geographical dispersion of energy efficiency. It provides high level research to help guide policy and decision-making, identifying key locales where there is more of a physical problem and locations where there is more to gain in terms of targeting energy improvement and/or encouraging behavioural change. The paper also allows a glimpse of the implications of a change towards a taxation regime based on energy efficiency, which contributes to the debate surrounding the “greening” of property based taxes.

The purpose of this paper is to review the issues involved in land value taxation and betterment and the issues involved in apportioning value between land and improvements.

The theoretical and valuation issues in betterment are reviewed and a case study of a betterment tax introduced in the UK is used to illustrate the practical problems in implementation.

The idea of land value taxation depends upon being able to apportion property values between land and improvements. This raises both theoretical and practical problems that are difficult to overcome.

The apportionment property values between land and improvements produces results that cannot be verified by market evidence, suggesting that an alternative approach be adopted through value-based recurrent property taxes revalued at frequent intervals.

Much of the literature has concentrated on the theoretical advantages of land value taxation rather than examining the practical problems of implementation. These suggest a different approach with less emphasis on betterment taxes and more on how recurrent property taxes can be an effective instrument for value capture.

The paper's purpose is to review the growth of computer supported valuation models and the increased access via information technology to property data in the world of property taxation. The paper aims to stimulate debate on what the short/medium term future may hold. Is there room for both traditional valuation surveying skills and computer mass appraisal models in the enlightened property taxation world, where transparency and access to property data is expected?

The paper compares and contrasts developments and trends in the use of automated valuation models (AVMs) across the world to assess property for local taxation purposes. It focuses in detail on three automated property taxation valuation systems of which the author has working knowledge and experience: Valuation Office Agency – Council Tax (Dwellings) and Non Domestic Rating (Commercial); Northern Ireland Valuation and Lands Agency – Domestic (Dwellings); Hong Kong Rating and Valuation Department (Dwellings and Commercial) property. The paper also considers the progress made in access to property data and data storage/retrieval.

Automated valuation programmes assist in the production of a valuation but its quality and accuracy are data and valuer led. One size does not fit all and there is no automated replacement for the subjective professional judgement of the valuer.

This paper considers the challenges, opportunities and possible problems when using computer driven valuation models for property taxation purposes.

The purpose of this paper is to investigate the extent to which UK equity prices reflect shareholder level taxation on dividends (dividend tax capitalisation). Despite an extensive theoretical and empirical literature controversy exists.

Using a sample of UK firm year ends from 1991 to 2007 archival accounting and share price data are used to test for the presence or otherwise of dividend tax capitalisation.

The paper finds evidence of equity values reflecting shareholder level dividend taxation. In particular, a significant reduction in the valuation of retained earnings, a measure of dividend paying potential, is observed around the July 1997 abolition of the repayment of dividend tax credits to tax exempt shareholders. This suggests a link between shareholder level taxation of dividends and firms’ cost of capital.

The analysis focuses on share prices and is therefore subject to an underlying assumption of shareholders’ understanding tax and other potential relevant information.

The taxation of dividends is an important issue because of the potential for it to influence firms’ cost of capital and therefore investment decisions. Further, non-tax costs may be incurred to the extent that attempts are made to mitigate any “adverse” tax effects.

The results indicate that taxation of dividends and share prices are associated and therefore also indirectly firms’ cost of capital. This linkage has implications for investment appraisal and the allocation of capital between competing demands.

In using an asset valuation approach the limitations of alternate methods of examining shareholder level taxation of dividends are avoided, e.g. analysis of dividend drop of ratios.