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Property Tax Administration in the City of Cracow, Poland W. Jan Brzeski

Property Tax Administration in the City of Cracow, Poland W. Jan Brzeski. Innovations in Local Revenue Mobilization World Bank, June 23-24, 2003. Background on K ra k ow. Population of 800,000 Land area: 327 km 2 140,000 parcels mostly private, but very fragmented

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Property Tax Administration in the City of Cracow, Poland W. Jan Brzeski

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  1. Property Tax Administrationin the City of Cracow, PolandW. Jan Brzeski Innovationsin Local Revenue Mobilization World Bank, June 23-24, 2003

  2. Background on Krakow • Population of 800,000 • Land area: 327 km2 • 140,000 parcels mostly private, but very fragmented • 35,000 buildings, of which 6,500 are heritage listed • City Council 75 popularly elected aldermen • 18 Auxiliary Councils popularly elected, little power • City Executive Board 7 elected by the City Council • City Administration employs 12,000

  3. Fiscal Background on Krakow • City budget revenue about 330 million USD • City own revenues 30%, nat’l gov’t transfers 70% • National revenue sharing transfers: 25% • National block grants (subsidies): 45% • Present deficit: 5% financed with: • Eurobond issue for infrastructure: mostly bridges • Transport Loan from the European Bank • previous year budgetary supluses • Creditworthiness Enhancement Program • Annual property tax ordinance, see Annex B

  4. Property Tax and Own Revenues

  5. Tax Exemptions and Relief • National property tax law and other national laws • City specific exemptions: • City organizational units and agencies • charitable institutions, except business used • institutions of higher education • libraries, municipally owned culture centers and clubs • every year budget planning provides estimate of foregone revenues • in 2000 national exemptions “cost” 7 million USD as compared to 41 million USD property tax revenue

  6. Tax Rates on Buildings

  7. Tax Rates on Land

  8. Procedures for Taxpayer Categories • LEGAL PERSONS • Legal persons make self-assessment for all properties • Payments on 15 day of each month • each December each taxpayer gets taxpayer declaration • NATURAL PERSONS • natural persons receive tax bill from the City • Payments allow 4 installments, but may be once a year • each December each taxpayer receives taxpayer declaration • See sample declarations in Annex D

  9. Organisational Structure • Municipal Department of Finance • Division of Taxes and Fees • Assessment of Taxes Unit • Accounting of Taxes, Payments and Fees • Property Tax Rulings, Collection and Control • Assessment and accounting decenteralised into 4 districts • Rulings, collection and control centralised in head office • See organisation chart in Annex C

  10. Tax Assessment Unit • Staff of 32 people • Tasks performed: • mailing annual declaration forms to legal persons • collect data to support tax levy • requesting copies of notary deeds from taxpayers • receiving and processing tax payments from legal persons • advise tax collectors and taxpayers • Verification made by Tax Rulings, Collection and Control • Notification from Geodesy Dep. (physical cadastre) • Notification of changes from taxpayers put into tax roll • See Annex E for sample notifications

  11. Accounting of Taxes, Payments and Fees • Staff of 43 collects also market and vehicle taxes • Tasks performed: • billing natural persons (primarily residential) • recording payments for all taxpayers, • penalty interest accounting and billing for arrear accounts • mailing payment demand to arrear taxpayers • maintaining individual and aggregate (global) accounts • reporting collection and execution statistics • Most people pay once a year with cash • Natural persons collection rate is about 98%. Annex F

  12. Arrears and Execution • In 2000, some 11,000 natural persons in arrears • in 2000, some 340 legal persons in arrears • in May, 3.1 million USD of the billed 38.6 million USD was in arrears from legal persons • 0.6 million USD of the billed 6.3 million USD was in arrears from natural persons

  13. Tax Rulings, Collection and Control • 13 staff members and 3 part-time bailiffs • Tasks performed: • rulings regarding applications from taxpayers, exemptions • verification of taxpayer declarations • lodging tax liens, sending bailiffs, seizing funds and wages • rulings on penalty payments • issuing tax certificates to private and private parties: 5.7 USD • in 2000: 1,888 “private” certificates, 4,826 “public” certificates

  14. PR, Taxpayers Service, IT • No formal PR program, no taxpayer education • all tasks are IT, but too little equipment • integration with city computerized MIS • no computerized transfer with Physical Cadastre

  15. Conclusions • Well organized activities within existing regime • Too little controlling for undisclosed properties • Insufficient computer link to the physical cadastre • Subject based fiscal and object based physical cad. • Current administrators fear ad valorem • They would prefer resetting of area based rates • Lack of analytical skills in impact and shift analysis • Apprehensive of PR, taxpayer education • Budget situation and politicians will need to press

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