Translated material
Pay off your apartments
The idea of revaluing land and buildings at market value, and then combining land tax and property tax in one tax with a significant reduction in the rate, was put forward four years ago by the Ministry of Finance and was practically not noticed by anyone then. Gradually, as social rhetoric grew in government statements, the idea was transformed into a discussion of the question of who should pay more and how to isolate the richest holders of apartment capital from the total mass of apartment owners. This was not surprising: periodic conversations about restoring the progressive scale of income tax were skillfully transferred to the discussion of the new tax. It was decided to follow the public demand for tax reforms in the spirit of social justice not within the framework of income tax, but within the property tax system.
The fact that the reform of real estate taxation should, according to the original logic, increase its collection, and therefore the income of municipalities, the Ministry of Finance was actually told to forget. Now the Ministry of Finance has the task of at least recouping the costs of administering the new tax. The reform itself is essentially designed to increase the tax burden on the wealthiest part of society.
However, in Russia, unlike European countries, the practice of collecting taxes on housing has never been particularly developed. Over the past century and a half, Russia has experimented much more actively with income taxes. And in modern times, when in the early 90s, a new scale of income tax rates was assigned annually for four years, and at the beginning of the twentieth century, when various options for a luxury tax were discussed, and even more so in the post-revolutionary time, when a colossal redrawing was begun all royal taxes.
Already in the 19th century, the poll tax was levied using rather sophisticated methods, providing for various deductions. In 1893, a housing tax was introduced, according to the explanation of the Ministry of Finance as a temporary replacement for the income tax. The idea didn't catch on. Apartment tax, housing tax, tax on buildings - the authorities have paid some attention to all of this over the last century, recalling the fact that real estate is also subject to taxation, but these taxes were clearly lost among the same income tax, excise taxes on alcohol , tobacco, tea, salt, coffee, chicory and even, in 1923, textiles and rubber galoshes.
In 1910, a reform of urban real estate taxation, innovative at that time, was carried out. The apportionment basis of the tax (where the total amount of the tax was established for each administrative-territorial unit, and then allocated by local authorities among taxpayers) was replaced by a share basis, and the tax was calculated on the basis of net income from the use of property. For owners who do not rent out their property, the tax was calculated on the basis of imputed income for similar properties. In fact, already then a mass real estate valuation system was proposed.
During the First World War, there was no time to improve the real estate tax. The treasury needed money so much that in 1916 an emergency tax was introduced on profits, levied in addition to the income tax, and in 1917 the provisional government introduced huge fines for late payment of taxes, including confiscation and imprisonment. Immediately after the October Revolution, there was also no time for trifles: the Bolsheviks imposed a one-time revolutionary tax on the population of 10 billion, which did not cancel current taxes.
They remembered the taxation of housing only after 1920, when the budget was divided into national and local. The latter included the tax on buildings. The tax reform of 1921, by prescribing land taxes and fees, partially affected urban real estate. In 1922, a decree was issued on the local apartment tax, which prescribed the procedure for collecting it from each square fathom of occupied living space and benefits. At that time it was not intended to link the tax to the cost of buildings. In 1926-1927, apartment owners were charged with targeted apartment taxes. A tax on buildings existed for several decades, but only in the 80s did the tax acquire an addressee: the tax began to be called “from the owners of buildings” and the state more or less tried to decide from whom to collect it. Finally, in 1991, the property tax for individuals began to be calculated based on the inventory value of apartments, and if it was not determined, on the value determined to calculate the amount for state compulsory insurance.
With such fragmented attention to the assessment and taxation of housing, there is hardly any hope that in the near future the tax will act as a “breadwinner” of local budgets, as in European countries. Although from our current point of view, the European, as well as the world, practice of collecting property taxes is by no means always fair. The United States, the Netherlands and South Korea, for example, regularly raise property tax rates depending on the government's need for money. France, on the contrary, has been levying a tax on almost the inventory value of housing for half a century. But this only proves the fact that the system by which real estate taxes are calculated and collected is not as important as the totality of real estate taxation, its regularity and the seriousness with which the state demands this tax from citizens.