Dr. Cliff Lipscomb
Day 2 of the conference started off with a global update on property tax valuation by Paul Sanderson, President of the International Property Tax Institute. This update was particularly interesting to me because of Greenfield’s global experience in working with property tax assessment systems. Currently, Greenfield Advisors, led by our tax assessment expert Ruel Williamson, is collaborating with the City of Port-au-Prince (Haiti) and a large city in South Africa to analyze and improve their property taxation procedures.
Sanderson’s presentation focused on the strengths and weaknesses of property tax systems in general and highlighted several case studies from around the world. One case study focused on Victoria, Australia, where the state’s government has implemented a vacant land tax. This tax is equal to one percent of the value of the capital improved value of the property in addition to other existing taxes. The tax is levied once the property has been vacant for more than six months within one year. One concern mentioned during the session was whether or not the vacancy tax applies if the property is listed for sale. However, Sanderson explained that the tax only applies outside of a sale process.
Vacancy taxes can also be used by economic developers to spur revitalization and fight blight in a given location. These taxes increase revenue for the local municipalities and encourage property owners to attract tenants for residential properties and businesses for commercial property. An example of blight tax used in the United States is in Cobb County, Georgia, where the goal of the tax is to improve the character of the community by encouraging the property owners to return the blighted properties to productive use, whether residential or commercial. In New York City, Mayor Bill de Blasio is considering implementing a vacancy tax to help fill the empty stores that are so prevalent in Manhattan. In New York, property owners often hold out for the perfect tenant willing to pay top dollar to lease the property. A vacancy tax could discourage this behavior by putting pressure on the property owners to lease their properties at potentially lower rents. Overall, vacancy taxes can be an additional revenue source for municipalities that simultaneously boosts economic growth in underdeveloped areas or encourages redevelopment in areas that are impacted by the negative impression that blighted properties have on communities.
Here at Greenfield Advisors, we can assist with any property taxation assessment needs, analyze the effectiveness of current taxation systems used by governing authorities, and provide consulting services to analyze property tax strategies under consideration. Contact us if you’d like our expertise to improve the efficiency and productivity of your property tax assessment process.
Contact: Cliff Lipscomb