The idea of introducing a unified tax on real estate instead of the current property and land taxes can only be described as new by a stretch. This keeps cropping up every time bureaucrats are faced with the question of how to replenish local and regional budgets. The idea has been revived by Prime Minister Vladimir Putin, who proposed introducing it as early as 2010, but at differentiated rates so that the owners of expensive "investment" real estate should pay more and the owners of more modest accommodation get some preferential treatment.
Izvestia has learned what is in store for the owners of standard one-room and two-room apartments.
Originally it was planned to introduce the tax on real estate in 2011, but Vladimir Putin proposes speeding up matters in order to start filling regional budgets with money in 2010. The current difficult situation prompts quick action.
"The tax revenues of local budgets should increase substantially, I very much count on it," he told the meeting of the Presidium of the Council on Local Government Development held in Astrakhan.
The real estate tax should replace three other taxes: the tax on the property of natural persons, the tax on the property of organisations and the land tax. Land and the buildings that stand on it will be regarded as a single unit of real estate, which is to be evaluated at market value and not proceeding from the assessments of the Technical Inventory Bureau. On the face of it, it seems simple. But the main question that remains unanswered is how to conduct the evaluation?
"There are some bureaucratic problems, Sergei Belyakov, assistant to the Minister of Economic Development told Izvestia. We have some problems with compiling a cadastre of plots of land; currently a cadastre of real estate does not exist. The prime consideration is social justice and not optimising tax revenues."
He said that although the Prime Minister told the Government to hurry up, the new tax cannot be imposed before 2011 for objective reasons.
"Amendments to the draft which passed the first reading should be ready by 2010, a representative of the Ministry of Economic Development told Izvestia. At this stage two challenges must be met: to create the cadastre mentioned earlier and to ensure that real estate is fairly appraised. The latter is the more difficult problem: the current evaluations of the Technical Inventory Bureau have nothing to do with reality as market prices change almost every month.
There is another delicate matter involved. It is one thing when a person deliberately invests in an apartment in a prestigious neighbourhood and derives profit from leasing it. But what is to be done about an old retired woman who has lived all her life in a small flat in the city centre and overnight becomes the owner of an expensive accommodation? If one follows the letter of the law, she too will have to pay huge amounts of money. At the rate of 0.1-0.5% the tax on a two-room apartment costing $300,000 will be $300-1,500 a year. But these are very rough calculations.
It is another question that, according to Mr Belyakov, the authorities will provide a "protection mechanisms" for property owners. In an interview with Izvestia, Presidential Aide Arkady Dvorkovich suggested that "the cut-off for paying tax on real estate would be 20 square meters per person. In other words, a family of three occupying a 60 sq m apartment (a standard three-room apartment) would pay no tax at all."