Property Tax as Basic Source of Regional Budget Tax Revenues


The property tax is a regional tax. There is the corporate property tax for legal entities, and the personal property tax – for population. The tax rate is established by regional authorities; it cannot exceed 2.2 % of the average annual cost for the corporate property tax, and 2 % of the overall inventory value of taxable assets for the personal property tax.

The corporate property tax is calculated based on the average annual cost of capital assets, and since 2013 movable assets are not subject to the given kind of tax. In November of 2013 Chapter 30 of the Tax Code was amended, which made it possible for regional authorities to make owners of commercial and business centres pay the property tax based on the cadaster value that approximates the market one, in distinction to the previously used inventory one. However, taking into account the mandatory introduction terms (approval of cadaster evaluation results and amending regional laws on the corporate property tax), the new calculation rules can take force only in 2015.

The state cadaster evaluation of real estate objects uses the Federal Evaluation Standard developed with account for international evaluation standards. In accordance with the standard, the evaluation is based on the territorial real estate market, prices of deals, offers for sale, information about lease rates, current yield of investment in real estate objects, operation costs, prices for construction materials, prices for land plots, cost of connection to utilities. These data make it possible to either compare the objects under evaluation with similar ones, present in the market, or evaluate the rate of return of the object or its construction costs.

The personal property tax is to undergo similar changes. The new property tax is to be calculated based on the cadaster value of the object, and there is a non-taxable deduction. The tax burden will increase during five years. The growth of payments will differ depending on the region and kind of housing.

Now, among tax revenues, the property tax in most regions stays on the second or third place by the contribution to the regional budget. In 2014 it formed, on average, 15 % of tax revenues of regional budgets. In some regions its share reached 22–27 %: leaders by this indicator were Vologda and Lipetsk regions, the contribution of property tax to budgets of the Komi Republic, Belgorod Region and Khabarovsk Krai was a little lower (22–23 %). However, absolute indices in these regions are comparatively low. They are significantly higher in Tatarstan, Sverdlovsk region, Krasnoyarsk Krai (with Moscow, Moscow Region and St. Petersburg as absolute leaders). If we speak about economic characteristics of these regions, Sverdlovsk region is included in the list of ten regions with maximum tax revenues calculated per person and based on the GRP, Tatarstan — based on industrial production and investment, Krasnoyarsk Krai – based on the GRP indicator.