Member News

IPTI | Update on U.S. & EU Property Tax Issues: December 2021

The EACC, in partnership with the International Property Tax Institute (IPTI), wants to keep its members up to date with the latest developments in property taxes in the USA and Europe. IPTI has put together below a selection of articles from IPTI Xtracts; more articles can be found on its website (


Indiana: This is how the recession will affect property taxes

What will be the effect of the COVID recession on the property taxes that fund Indiana local governments? I’ve been thinking and writing about the possibilities for a year and a half. Now we have enough data to answer that question. No spoilers, though. Let’s consider what could happen — and what did happen after the Great Recession in 2007-09.

The Great Recession depressed new construction and reduced the demand for property. Property prices fell, especially for homes. Statewide, assessed values fell in 2011 and again in 2013. Assessments declined in 54 of 92 counties in 2013 alone.

The COVID recession was in 2020. Changes in property values were assessed in 2021, for tax bills in 2022. The recession of 2020 would hit local government budgets in 2022.

Property tax revenue is limited by the state-imposed maximum levy. It increases each year based on the six-year average of statewide non-farm income growth. That percentage increase is called the maximum levy growth quotient (MLGQ). In 2009 income dropped, and this negative number depressed levy growth starting in 2011 — there’s that two-year lag again — and continued to depress the MLGQ through 2016.

The change in income in the COVID recession would enter the maximum levy calculation in 2022, and remain through 2027. Again, the recession first affects budgets in 2022.

Tax rates are determined each year by dividing the levy by the assessed value in each jurisdiction. If levies rise, even slowly, while assessed values fall, tax rates go up. Higher tax rates make more property owners eligible for credits under the constitutional tax caps. Tax cap credits are revenue losses for local governments. Credits did increase after the Great Recession.

So local officials been wondering and worrying: Would assessments fall for 2022 tax bills? Would falling incomes restrict growth in the maximum levy? Would rising tax rates increase tax cap credit losses? There was no way to know. Until now.

We know what will happen to the maximum levy growth quotient. During the recession unemployment increased and wages fell, but all that federal pandemic aid caused non-farm personal income to rise by 5.7% in 2020, the biggest increase since 2011. Adding that number to the six-year average increased the MLGQ from 4.2% for 2021 budgets, to 4.3% for 2022.

But if assessed values fall, tax rates would have to rise to generate those higher levies. Tax cap credits could rise enough to erase much of the revenue increase.

Now the numbers we need are posted on Indiana Gateway, the source for data on Indiana local government, at Click Report Search, then Assessed Value, to find the first numbers I’ve seen about assessed value for 2022.

I compared them to the numbers for 2021. The result: Assessed values are up! Net assessed value, after deductions, rose 5.6 percent statewide for pay-2022. The average over the past four years was 3.4 percent.

The big concern about property values was commercial property, such as restaurants, strip malls or office buildings. Business was down because people didn’t want to risk COVID. People worked from home and didn’t need the office space. Occupancy rates were down, and so were rents. That could have depressed assessments.

But home prices are growing fast, and manufacturing businesses have done well. Apparently, that was enough to offset any commercial property declines in assessed values.

Since assessments grew faster than the MLGQ limit on levy growth, it’s likely that tax rates will fall in many jurisdictions. There should be no big increase in tax cap credits.

That’s good news for local governments, but maybe not for property taxpayers, especially homeowners. Tax rates may fall, but many home assessments will rise more. Tax bills could increase. The constitutional tax caps won’t limit these increases, because the caps are based on percentages of assessed value. When assessments rise, so do the caps.

Owners of farmland may see tax reductions. Farmland assessments are not scheduled to rise very much, so falling tax rates would cut farmland tax bills.

Local governments can lay to rest the threat of recession. Most won’t suffer property tax revenue losses as a result of the 2020 COVID downturn.

Connecticut: Six Steps Property Owners Should Take in the Event of a Revaluation

Greenwich, Hartford, New Haven and Trumbull are on a list of nearly 40 Connecticut municipalities that are conducting a general revaluation on the October 1, 2021 Grand List.  In a revaluation, the assessor determines the value of every parcel of real property in the municipality as of the October 1st revaluation date. Connecticut law requires municipalities to conduct a general revaluation at least once every five years.  Therefore, in the ordinary course, the assessment established on the revaluation date will be used to determine the taxes to be levied for the next five years. Taking an appeal immediately after a revaluation maximizes a property owner’s potential tax savings.

The key issue in a property tax appeal is the property’s true value as of the October 1 revaluation date.  Even if an assessment has decreased since the last revaluation, an excessive assessment will result in the property owner bearing a disproportionate share of the tax burden.

Local assessors gather property-related data and information on an ongoing basis but ramp up efforts in the months leading up to a revaluation.  If your municipality is conducting a general revaluation for the October 1, 2021 Grand List, you will receive a notice of tax assessment change. Once the notices are issued, there may be a chance to meet informally with the assessor or his/her representative(s) to discuss the new assessed value; however, if a property owner wishes to challenge the assessment formally, a written appeal must be filed with the local Board of Assessment Appeals by the February 20, 2022 statutory deadline (unless the town extends the deadline 30 days, making it March 20, 2022).

What steps should a property owner take when there has been a revaluation?

  1. Watch for notice from the municipality related to the revaluation. This notice usually contains information on the new assessed value, the opportunity to meet informally with the assessor or his/her representative(s) and the deadline (February 20) to appeal to the local Board of Assessment Appeals.
  2. Review the notice carefully. Does it accurately identify your property? Do you own other parcels for which you did not receive notices?  If the assessor’s new value is stated in the notice, do you believe that it reflects the property’s true fair market value as of October 1, 2021, based on market conditions and property-specific facts?
  3. If you believe the new value is too high, assemble information and documentation which supports your position. Recent appraisals, listings for sale and offers to purchase, sales of comparable properties, income and expense statements, leases and the like are all helpful in determining a property’s value. Of course, data close in time to the October 1, 2021 revaluation date will be most relevant.
  4. Confer with experienced legal counsel. In consultation with counsel, all matters related to the property’s value as of the revaluation date and appropriate legal and valuation grounds for an appeal will be discussed, and a go-forward strategy will be formulated.
  5. Decide whether to attend an informal meeting or to appeal to the Board of Assessment Appeals. Often, factual errors or mistakes may be corrected during an informal meeting with the assessor or his/her representative(s). The formal appeal process, however, begins with filing a written appeal with the Board of Assessment Appeals.  Unless extended, the deadline to do so is February 20, 2022, although an appeal should be prepared well in advance of the deadline.  Except in unusual circumstances, you will lose the ability to challenge the October 1, 2021 assessment if a timely appeal to the Board is not filed.
  6. Once the Board issues its decision, decide whether to appeal to the Superior Court. If a property owner remains dissatisfied with the Board’s decision, the only recourse is to appeal to the Superior Court. A court appeal must be filed within two months of the Board’s decision, or the right to appeal is lost.

As with any contested administrative or court proceeding, the decision as to whether to pursue a tax appeal should not be made lightly.  A thoughtful, critical analysis of whether an appeal is essential will usually result in a financial benefit to the property owner, whether an appeal is ultimately pursued or not.

Once an appeal is underway, the property owner and counsel must work as a team to prepare a compelling presentation to the Board and if necessary, to the Court, utilizing fact and expert witnesses, and documentary evidence to establish that the municipality’s value is excessive, and that the taxpayer’s proposed value is correct.

Wisconsin: System for paying for local government is broken. The state Legislature needs to find ways to fix that.

What is the fairest and most efficient way for citizens to pay for police and fire protection, safe streets, libraries, parks and other public services cities provide?

This is the real question University of Wisconsin-Madison professor Manuel Teodoro indirectly raised in his recent commentary urging elimination of the long-standing practice of municipal water utilities making payments in lieu of taxes – what are known as PILOTs – to municipalities. But Teodoro is mistaken in calling for an end to PILOTs in the absence of making any other changes to how municipalities are funded.

A review of PILOTs needs to be part of a broad overhaul of municipal finance in general.

Water utility PILOTs are allowed by state law for several reasons that weren’t acknowledged by Teodoro:

  • PILOTs ensure that tax-exempt properties contribute at least minimally to the cost of police and fire and other municipal services they receive. While tax-exempt properties pay no property taxes, they do pay municipal water utility charges. PILOTs are a way for municipalities to spread the cost of public services more fairly and broadly, and thereby provide relief to property taxpayers. In some communities, such as La Crosse, 50% of the real estate in the city is exempt from taxation and contributes nothing to the cost of general municipal services beyond the PILOT included in the water utility bill.
  • PILOTs provide the municipality, as the owner-operator of the water utility, with a dividend in return for the considerable investment the city or village makes and risk the community incurs in establishing the utility.
  • Municipal utility facilities are located on land within the municipality that could otherwise be privately developed with the owners paying property taxes.
  • PILOTs provide historically stable and essential revenue that can be used to improve key public services, lower property taxes rates or to pursue other policy goals.

Water utility PILOTs clearly serve several policy goals and are a small but critical part of the municipal revenue stream, which cannot be viewed in isolation.

But Teodoro’s focus on PILOTs exposes the need for a broader discussion about how municipalities should be funded, a discussion the League of Wisconsin Municipalities is eager to engage in with state policymakers.

Wisconsin’s system for funding local government is broken and needs a comprehensive revamp. Cities and villages need reliable, growing and diverse sources of revenue to continue to serve the needs of residents. Wisconsin municipalities currently receive most of their funding from two sources: property taxes and state aids. For different reasons, neither of these sources are growing, but communities have few other revenue options available.

State aid programs that help pay for city services need to be better funded and redesigned. Over the last 20 years, state aid for police, fire and other services has been steadily declining in real dollars, while inflation has caused average prices to increase by 51%.

Meanwhile, our overreliance on property taxes to pay for K–12 schooling, county government and municipal services places too much of a burden on residential property owners and small businesses. According to a February 2019 report by the Wisconsin Policy Forum, Wisconsin municipalities rank seventh nationally for being the most reliant on the property tax for paying for local services. Homeowners in many communities have no capacity for paying higher property taxes. Currently, 68% of the statewide property tax levy is paid by homeowners.

One way to deliver relief to property taxpayers is for the state to provide cities other tax revenue options, such as a local sales or income tax. Both could be employed to lower property taxes and the revenue from both would grow with the economy. Unlike other states, Wisconsin law prohibits cities and villages from imposing other taxes such as a local sales or income tax. Only counties may impose local sales taxes in Wisconsin.

Municipalities would welcome a review of PILOTs as part of a broader discussion on reforming municipal finance overall. The League is poised to make modernizing and diversifying municipal revenue options and revitalizing state aid programs our top priority before the Legislature during the coming year and going into the next legislative session.


United Kingdom: Business Rates – an unpopular tax imposed in unfortunate circumstances

It is almost trite to say that retailers have had a tricky time over the last 20 months. The combination of enforced closures, and more recent supply chain difficulties and staff shortages have left them reeling. On 1 July the business rates holiday ended and, although rates will be discounted by up to 2/3rds for smaller retailers until March 2022, most will come under increased pressures. It is unsurprising that many are calling for a complete overhaul of the business rates system.

Business rates are calculated by multiplying the rental value of the relevant property by the Uniform Business Rate (UBR), currently 51.2 as standard but 49.9 for small businesses, which is currently revalued every 5 years.  It is the occupier’s responsibility to pay business rates and this responsibility passes to the owner if the property is empty.  Limited exemptions are available in certain circumstances and reliefs are available to a few entities.  If the property is unoccupied then empty rates relief is available for the first 3 months but this is often of no practical benefit to retailers who lease their premises as often the value of any empty rates relief claimed will be passed to the landlord at the end of the term of the lease.

Business rates have a long history in the UK, with local versions imposed by the Poor Relief Act 1601.  Locally-acting legislation was consolidated by the General Rate Act 1967 before it was replaced in its entirety by the Local Government Finance Act 1988 and later supplemented by further legislation such as the Non-Domestic (Unoccupied Properties) (England) Regulations 2008.  The 1988 legislation meant that the UBR is set by central Government rather than locally and the central Valuation Office is responsible for administering business rates with the local billing authority only responsible for collection and enforcement.  An effect of this centralisation is that appealing any business rates decision can be complicated and protracted with appeals having to go to the Valuation Office Agency.

Another major complaint is that the system is cumbersome and does not reflect economic movement.  Although the UBR is revalued periodically, these revaluations can be delayed, with the result that the values used for the calculation may differ wildly from the actual value of the properties.  A delay in the 2015 revaluation meant that 2010 data was used to calculate some 2017 business rates.  Other jurisdictions such as Hong Kong and the Netherlands revalue business rates every year using an arguably fairer and certainly more flexible digitalised system.  The use of digital records also makes the system more transparent and therefore easier to challenge; a welcome move for retailers.

We must also consider the effect of online-only retailers.  The boom in online shopping means that traditional retailers are doubly disadvantaged by the consequent loss of trade and having to pay a tax for which there is no online-only equivalent.  This is due in some part to the challenges in implementing such a tax; whilst property is easy to identify and quantify, the benefit of online sales is less so.  The Spring 2020 Digital Sale Tax did introduce some measures but it only collected 2% of online revenues made in the UK.  It is also due to be phased out and replaced with a globally agreed system.  While this may assist in the long-term, it seems unlikely that this will bring relief in the immediate future.

Whilst recent developments such as the freezing of the Uniform Business Rate for another year and the decision that revaluation will take place every three years rather than every five have been broadly welcomed, many think that they are not enough.  Although a 50% discount can be claimed, this discount is capped at £110,000 which means that it is of little to no use to all except the smallest retailers with the fewest premises.  A consultation on these developments has been announced and closes in February 2022 but this is on the technical aspects of the announcements, not the general principle of business rate reform.  The fact remains that business rates are a valuable source of income which the government is reluctant to relinquish.

In the meantime, retailers are still struggling and many of them blame business rates.  Frasers Group, who have announced the closure of its House of Fraser flagship store on London’s Oxford Street (actually due to the landlord wanting the property back, but it is not relocating), call the business rates system “archaic” and “astonishingly outdated”, going further to say that “without [a review of business rates] further store closures are inevitable”.


  • Paul SandersonPresident | psanderson[at]
  • Jerry GradChief Executive Officer | jgrad[at]
  • Carlos ResendesDirector | cresendes[at]

Compliments of the International Property Tax Institute – a member of the EACCNY.