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Pawel Swianiewicz
T A B L E 9 . 4 Revenues from Physical Persons and Legal Entities, by Size of Local Government, 2000 (percentage of revenues) Number of inhabitants
Source of revenues
Individual taxpayers Legal entities
Fewer than 5,000
5,000– 10,000
30 70
34 66
10,000– 20,000– 20,000 50,000
32 68
24 76
50,000– More than 100,000 100,000
20 80
16 84
Source: Author’s calculations based on financial reports of local governments.
Which categories of properties contribute to budget revenues in the most significant way? Unfortunately, we do not have precise information on revenues from housing properties, plots used for commercial activities, and commercial buildings. But we can make some estimations from data on revenues from physical persons (individuals) and from legal entities. The information is not precise because many small firms operate as physical persons, without legal entity status. But with a risk of some simplification, we may say that revenues from legal entities represent property tax paid on commercial activity, whereas revenues from physical persons represent property tax paid on buildings used for housing and on empty plots of land allocated for housing purposes. If we take into account the structure of property tax rates, it should not be surprising that the dominant share—about 80 percent of the total tax yield—of revenues comes from legal entities (that is, from properties used for commercial activities). Revenues from legal entities are especially important in big cities, whereas in small communities revenues from individual taxpayers play a more significant role (table 9.4).
Local Tax Policies In general, local governments may express their local tax policies in three different ways: 1. They can set local tax rates, within limits decided in the central legislation. 2. They can grant tax exemptions to certain categories of taxpayers, other than those listed in tax exemptions decided in the central legislation. 3. The local mayor can grant individual tax releases or reductions to individual taxpayers.
