Immovable property tax in the Czech Republic as an instrument of fiscal decentralization

Abstract

The issue of fiscal decentralization is connected with efforts to build a space for own decision-making in municipalities when raising funds. In the framework of fiscal decentralization, municipalities in the Czech Republic have an opportunity to influence immovable property tax revenues. The aim of the research is to find out the municipalities’ attitude towards the possibility of increasing immovable property tax revenues through a coefficient and how this option is used by municipalities. In the article, there is a description of the immovable property tax development in the Czech Republic on the basis of time series. The research relies on the evaluation of secondary statistical data and on the results of primary research focused on the application of the local coefficient. Municipalities have the option to edit tax components and the amount of tax reflects then the specificities and needs of the community. However, almost 92% of municipalities still postpone the introduction of a local coefficient. The motivation for the introduction of local coefficients was an increase in municipalities’ revenues generally or the need to fund specific projects. On the other hand the empirical research showed that some form of compensation is introduced in 46% of the municipalities.

Keywords:

• compensation for tax
• fiscal decentralization
• immovable property tax
• local coefficient
• tax imposed
• tax revenues

JEL Classification:

• H70
• H71

Additional information

Notes on contributors

Jana Janoušková

Jana JANOUŠKOVÁ, PhD, is an Associate Professor on Silesian University in Opava, School of business administration in Karviná, (Department of Finance and Accounting) Czech Republic. She lectures in courses Taxation and Tax Policy of the Czech Republic, Application of tax law, Tax accounting, Taxation of the property and consumption. Her research interests are taxation and tax policy, social insurance, tax policy of local government units. She is author of many papers, published in international peer-reviewed journals and books or chapters in books. She has been involved in the research projects funded by the Czech Science Foundation.

Šárka Sobotovičová

Šárka SOBOTOVIČOVÁ, PhD, is a Senior Lecturer on Silesian University in Opava, School of business administration in Karviná, (Department of Finance and Accounting) Czech Republic. She lectures in courses Taxation and Tax Policy of the Czech Republic, Consumption taxation, Taxation of property and consumption, Entrepreneurs tax record. Her research interests are Value added tax and property taxation. She is author or co-author of many papers, published in international peer-reviewed journals and several chapters in books.