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Global recession has increased the importance of property taxes around the world

Nearly 170 countries have a least one tax on property and over 100 have at least one recurrent tax on immovable property, according to Gerry Divaris, director of the International Property Tax Institute.

He told a seminar in Los Angeles that the complex nature of property taxes often leads to blank stares and confusion among taxpayers but they are such an important source of revenue they are here to stay.

Industry professionals and corporate taxpayers with a common interest in property tax attended the event co-sponsored by the IPTI and the Royal Institution of Chartered Surveyors at the offices of Ernst & Young.

‘Although property tax is probably the most unpopular tax on the planet, it is one of the more important taxes we have around. It has a bad name because it has such an in your face feel, but if properly deployed and properly utilised it can be really helpful,’ explained Divaris.

The seminar heard that while the impact of the global recession has increased the importance of property tax, it has also created problems for individuals, corporate taxpayers, and governments.

In the US as well as other countries, the economic recession, which caused mass unemployment, has made it difficult for people to pay for many of their expenses, including property taxes. In addition, businesses have seen a decline in revenue, making it more difficult to pay overhead, such as payroll and property taxes.

As a result, governments have experienced increased pressure as they are facing shortfalls in revenue, but increased demands for services.

‘Regardless of the country, we all have the same hurdles to overcome. We all have issues of economic factors, legislation, jurisprudence and valuation,’ Divaris added.

The seminar hears that despite the pressures that many countries face, some property tax systems are far more developed than others. Canada, Australia and the US are among those considered advanced and generate strong revenue, according to Divaris.

The current state of property tax and assessment in the US is currently hotly debated due to a scandal in California which saw the arrest of Los Angeles County Tax Assessor John Noguez last year on charges of lowering property tax bills in exchange for campaign contributions, allegedly costing the county over $1 million in property tax revenue. Also charged were deputy assessor Mark McNeil and Noguez tax agent Ramin Salari.
 
Peter Kotschedoff, of the California Alliance of Taxpayer Advocates (CATA), a trade association representing the property tax consulting industry, has been active in supporting or opposing actual or proposed legislation that affects taxpayers, property tax consultants and attorneys.

With an eye toward improving property tax transparency, Kotschedoff said that CATA is currently supporting a proposed bill called Assembly Bill 1151, which requires property tax consultants to register with the California Secretary of State.

‘The climate over the past year will lead to a more controlled environment within the property tax arena,’ Kotschedoff explained.

Divaris said that the scandal underscores the fact that practitioners globally need to stay plugged in and understand the ongoing changes throughout the industry.

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