1. Valuation and Implementation: the International Experience William McCluskey University of Ulster

2.  What is to be taxed?  How is the tax base to be initially “weighted?”  To what level should this weighted tax base be taxed?  How should the tax be administered?  Which level of government should determine the tax policy, administer the tax, and receive the revenue?  What implementation strategy should be followed?

3.  What is to be included?  Land only (e.g., Jamaica, Australia, New Zealand)  Buildings only (e.g., Albania, Tanzania)  Land & Buildings (e.g., United Kingdom, New Zealand, Poland)  What is to be exempted or given relief?  Varies considerably between countries Foreign embassies Government property, agricultural land Religious & educational institutions Highways & harbors, etc.

4. What is to be taxed: Valuation Basis VALUE NON-VALUE CVARVAREALOCATION LVIMPTOTALMV

5.  Define a sufficiently broad value base to:  Minimize economic distortions  Mobilize political support  Facilitate administration  Encourage greater taxpayer equity & compliance

6.  Should the property tax burden be allocated based on such criteria as:  Property unit (i.e., each property regardless of size or location would pay an equal proportion of the tax burden): Non-value based e.g. Arnona in Israel  Property size (i.e., each property regardless of location would pay an equal per sq. m. rate). Area based  Property value (i.e., each property would pay the tax based on their relative property value). Ad valorem

7.  Application of differential tax rates (New Zealand)  Split rates (USA, Grenada)  Defensibility of differential rates

8.  Fundamental administrative components:  Property identification & registration  Property information management  Valuation  Tax billing  Revenue collection  Enforcement  Appeals/Dispute resolution

9. VALUATION DISCOVERY ASSESSMENT BILLING COLLECTION The Property Tax Process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 APPEALS Stage 6

10. Google Maps

11. “Determining what data on property characteristics to collect and maintain for a CAMA system is a crucial decision with long term consequences.” “Collecting data that are of little importance in the assessment process should be avoided.”

12. Valuation Data: A Question of How Much? Land Value Size Topography Location Shape Capital Improved Value Size of land and buildings Quality Age Amenities (garage, heating etc) Location Type (Det., SD, Ter, Apart) Sources of Data!!!!!

13. Price/Rental Information Location Information Property Attribute Information VALUATION MODEL – Automated or “Hand Crafted” VALUATIONS

14. Properties requiring research & review Locality Definition (area from which comparables derived) Locality Definition (area from which comparables derived) AVM Valuations & Confidences Business Decision To Data Validation for Correction Property Data (Group, type, floor area, age, bedrooms, rooms, garage ) Property Data (Group, type, floor area, age, bedrooms, rooms, garage ) Models (MRA, algorithms and variables) Models (MRA, algorithms and variables) AVM estimates requiring quick desk adjustment AVM estimates which can be accepted

15.  Several countries have tended to maintain policy within the central government, allocate revenue to the local governments and delegate most of the administration to local governments  Must establish a revenue and administrative correspondence giving the various property tax aspects to local governments while maintaining a higher level of oversight to ensure equity  Strong central government support is CRITICAL for successful implementation of property tax reform

16.  Two basic approaches  Valuation-pushed: initially focuses on the cadastre and property valuation. Improves cadastre quality and valuations to increase revenue & equity  Collection-led: initially focuses on the collection and enforcement components. Improves collection & enforcement based on the premise that improved valuations in the absence of improved collection system will not realize short or long-term gain.

17. International Usage of the Property Tax by Basis

18. Countries that use Land Value as primary property tax - revenue source Australia (State Land Tax – Municipal Rates) Queensland New South Wales Northern Territory Kenya Jamaica Fiji New Zealand (Choice of 3 bases, ARV, CIV and LV) Estonia South Africa abandoned LV in 2004!

19. Some of the Valuation Issues: On the Plus side Land value would require much less data Sales could be extrapolated much further due to homogeneity Indices are more easily applied again due to homogeneity Easier administration as fewer recurrent inspections required Greater equity achievable due to less volatility in land values Acceptance by taxpayers due to only 30-40% of total value being taxed

20. Some of the Valuation Issues: On the Negative side Lack of sales in high value urban areas Narrow tax base/wealth due to improvements excluded Explainability/understandability for taxpayers Identifying the taxpayer and parcel Database of sales transactions