Reforming the real estate taxation system as an element of increasing the tax capacity of territorial communities

Анотація

The article states that the tax on real estate other than land is a cost-effective tool that contributes to GDP growth and can become an essential source of revenue for local budgets in Ukraine. However, in Ukraine, the role of the tax on real estate other than land in filling the vast majority of local budgets of territorial communities is relatively insignificant for both objective and subjective reasons. The author finds that the main reasons include the incompleteness of the State Register of Rights to Real Estate, the problems of interaction between local governments and the tax service in the process of tax administration, the availability of benefits, as well as a socially unfair approach to the formation of the tax base. In addition, local governments often avoid increasing real estate tax rates because of the risk of causing social discontent. This also limits the fiscal potential of the real estate tax. The article emphasizes that strengthening the financial capacity of territorial communities is a priority task of state policy, and real estate tax can play an essential role in this process. However, the current tax system does not take into account the market value of real estate, which creates an imbalance between its actual price and the tax burden, making it difficult to effectively fill local budgets. The author explains that reforming approaches to the taxation of real estate based on its estimated value will contribute to the fairness of taxation and increase the revenues of local budgets. Approaches to determining the estimated value of real estate for tax purposes in the Baltic States are analyzed in detail. The reasons preventing the introduction of the estimated value as a basis for the taxation of real estate other than land in Ukraine are identified. Steps for reforming the tax base of real estate in Ukraine, which will be based on its estimated value, are proposed, including: conducting a full inventory of both communally and privately ownedreal estate; ensuring the rapid and maximum filling of the State Register of Real Rights to Real Estate in cooperation with local governments; developing a mechanism for calculating the estimated value of real estate and the frequency of its revision; determining the institution that will be responsible for conducting real estate estimation for tax purposes, creating a register of real estate estimated value and its publication.

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