The delayed tax could be introduced by January 2019 at the latest.
Although many believed that the introduction of the property tax had been postponed indefinitely, it seems that the delay could be rather short. The most recent statement by Prime Minister Andrej Plenković, who has never said that he has given up completely on the idea, confirms that the government has no intention of admitting defeat. The only real question is when will Plenković’s government try again to launch the tax since it is evident that it will not happen on 1 January 2018. Another important issue is what changes will happen to the tax which has already been passed in Parliament, reports Jutarnji List on August 25, 2017.
Possible new deadlines for the introduction of the tax being mentioned are the beginning of the second quarter of 2018 or 1 January 2019. The argument against the shorter deadline is the fact that it would again be too early for many of the 127 towns and 428 municipalities which have to prepare for the tax, although realists warn that for about a third of the local government units not even a few years of delay would be enough.
Some experts suggest that the delay should be used to simplify the forms by which owners have to submit data on their properties. “We should use the existing communal fee database and expand it by maybe two or three data categories, and not add more to that. It should be borne in mind that a significant number of people will not even understand the forms, although they seem simple,” said an expert close to the government. Anyway, the Prime Minister has already stated that people should continue submitting the forms which they have received.
As for 1 January 2019 as a possible new date for the introduction of the property tax, the beginning of a year would be a natural deadline since the property tax is an annual tax. However, it is supposed to be paid quarterly, so in reality, it can be launched during a year as well. The problem with the delay until 2019 is uncertainty about the government’s future. What if the government collapsed and there are early parliamentary elections? No one wants to introduce new taxes close to elections.
It seems that the key change in the property tax as it is conceived now is that the discretionary rights of local government units to determine coefficients could be reduced. There are coefficients for zoning, condition, age and manner of usage. All the coefficients other than the manner of usage allow for a relatively small discretion for local governments to determine them (between 0.8 and 1.2), but the range is huge when it comes to the usage (between 1 and 10).
Given that no local politician will dare to maximize the tax burden on the local population which should re-elect him or her, it is feared that local governments would then rather focus on businesses in their areas, especially hotel companies which own and lease extensive properties. It is not a secret that hotels were extremely concerned about the excessive discretion left to local governments.
When leaving such an extensive range for mayors to determine coefficients for real estate usage, it was thought that local authorities should have the right to decide what kind of business activities they want to attract to their areas. However, the way in which local politicians operate suggests that they are not led by economic logic, but rather by a political one, which could endanger the wider economic interests of the whole country.
It is also unclear whether other inconsistencies in the law will be corrected. For example, perhaps the status of the so-called “first property” should be better defined. The first property can be a palace, as well as a 30-square-metre apartment. Is it right for them to have the same tax status, or should the coefficients be determined in terms of the number of users compared to the size of the property?
Translated from Jutarnji List.
