IPTI | Update on U.S. & EU Property Tax Issues: July 2022

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 (www.ipti.org).

United States

New York: The dubious value of ‘value capture’ financing

Gov. Hochul’s Penn Station Area Civic and Land Use Improvement Project is speeding toward a vote this summer. But on May 9, New York City’s nonpartisan Independent Budget Office confirmed that the state’s proposal to use “value capture financing” to pay for it contains too little information to evaluate its prospects for success. As researchers who studied a similar financing scheme in Hudson Yards, we found a surprising twist: Such deals not only create and capture new revenues, but can also destroy them.

The state’s plan would provide much-needed upgrades to Penn Station. To pay their share of the costs, estimated at $10 billion, the plan would rezone eight surrounding blocks to allow for larger buildings and “capture” new property tax revenues to pay back the state’s infrastructure costs.

Governments love the idea of paying back today’s infrastructure expenses with expected future revenues. This so-called self-financing scheme promises to encourage growth nearby and burden local property owners with the project costs rather than spread those costs among all city or state taxpayers. In practice, however, value capture is far less straightforward as property values change in and around the project area, complicating what might otherwise look like simple math.

Fortunately, New York has experience from which it can draw: The state plan is similar to the one the city used in Hudson Yards. In a recent article in the Journal of American Planning Association, we examine the performance of Hudson Yards’ financing structure over the past 20 years. Our analysis shows that rather than paying for itself, Hudson Yards required citywide tax dollars to repay its infrastructure costs, entailed massive tax breaks to developers, and negatively impacted the value of commercial properties in other parts of the city, among other unanticipated outcomes.

As the state proceeds with the Penn Station redevelopment plan, it’s vital to learn the right lessons from recent history.

First lesson: Pumping billions of dollars of public and private investment into a targeted geography does not guarantee subsequent appreciation in property values. Value capture schemes presuppose that liberalizing zoning and investing in a designated site induce growth. In the case of Hudson Yards, the city invested $3.5 billion for the No. 7 subway expansion and a public park, after which the Related Companies built a platform over the West Side railyards and luxury skyscrapers on top of it. These investments increased property values in the area by 295% between 2009 and 2020, compared to an 83% increase in Midtown.

But this value almost did not materialize due to the Great Recession, significantly delaying construction in the area and diminishing the revenue streams committed to repaying the infrastructure bonds. To help the project through this crisis, the city subsidized it with an extra $359 million from its own budget. If property values do not grow or appreciate quickly enough to repay the initial public investments, value capture schemes can collapse.

Second lesson: Some of the value generated in a district is not really “new” as it comes at the expense of other parts of the city. Corporate tenants from Midtown, ironically the same area the Penn Station redevelopment hopes to aid, moved en masse to the new towers in Hudson Yards. Between 2013 and 2018, Midtown lost 12 million square feet of office tenants while Hudson Yards gained more than 7 million. In a slowing regional market, the Penn Station proposal would fuel more cannibalization, using public dollars to lure tenants back to Midtown after just luring them to Hudson Yards.

This is particularly worrisome when the commercial sector is still struggling and the future of office work is up in the air.

Third lesson: Because governments depend on new property tax revenues to repay their infrastructure bonds, they undermine themselves by giving developers tax breaks or allowing them to reduce their property assessments, as they did in Hudson Yards.

From the project’s inception, developers were guaranteed property tax breaks of up to 40% for 20 years. This city will lose $1.1 billion in revenue just for the first phase of the project. There were no restrictions on property owners disputing the Department of Finance’s assessed valuations in value capture districts. In fact, Hudson Yards experienced more appeals activity than Midtown, which cut into the revenues the city had anticipated to pay the redevelopment costs.

Commercial property owners in Hudson Yards effectively triple-dipped from the public till: They benefited from new infrastructure and lowered operating expenses to augment investment values while the municipality filled gaps in incremental revenues with monies from the general fund.

Value capture financing rests on a simple theory, but its implementation is complex and easily undermined. Be forewarned.

Kansas: Supreme Court reverses property tax decisions favorable to Walmart, Sam’s Club

Legal issue involves Johnson County’s controversial valuation of big-box stores

The Kansas Supreme Court waded into a simmering dispute Friday in the appraisal industry on valuing real property of big-box retails stores by overturning lower court decisions rejecting Johnson County’s evaluation of nine Walmart Inc. and two Sam’s Club stores.

The state’s highest court unanimously reversed a 2021 decision of the Kansas Court of Appeals and previous action by the Kansas Board of Tax Appeals that found the county overvalued the retailers’ property by tens of millions of dollars. The lower jurisdictions said the buildings should have been valued at what each would sell for if vacant or “dark” rather than at values that reflected earnings through lucrative lease agreements associated with those businesses.

Walmart took legal action to challenge methods used by Johnson County that resulted in 2016 and 2017 appraisals nearly double 2015 tax values for the properties. The case raised questions about whether standards set forth in law by the Kansas Legislature were appropriately applied.

After receiving Johnson County’s appraised value of the 11 properties, Walmart sought intervention by the state board of Tax Appeals. BOTA lowered valuations of each property and ordered Johnson County to refund overpayments for the 2016 and 2017 tax years.

Johnson County appealed to the state Court of Appeals by claiming BOTA incorrectly interpreted state law. The divided Court of Appeals, however, determined BOTA appropriately adhered to Kansas law. That took the case to the state Supreme Court, which issued an opinion instructing BOTA to reconsider the case by fully reviewing the county’s evidence on property appraisals.

Ed Eilert, chairman of the Johnson County Commission, said the state Supreme Court’s reversal of the Court of Appeals in the dark-store case would enable consideration of all evidence of market value.

“A Kansas Supreme Court decision on the valuation of big-box retailers is critical for local governments across the state of Kansas,” Eilert said. “This case has been about equity for taxpayers. Every property owner in Kansas, from the large retailer to the homeowner, should be treated equally as the Kansas Constitution requires. Equity is an important factor in property appraisal.”

Walmart spokesman Randy Hargrove said the company would again make its case to BOTA in light of the state Supreme Court’s decision.

“While we disagree with the decision,” he said, “we look forward to asking the Board of Tax Appeals to reaffirm its prior findings about the proper assessed values of Walmart’s stores.”

Alan Cobb, president of the Kansas Chamber, expressed confidence BOTA would subsequently conclude Johnson County “overstepped its authority by drastically increasing big-box valuations.”

He said it was clear Johnson County’s government leaders and the county appraiser’s office disregarded state law when it “concocted the imaginary fairy-tale” theory of imposing property taxes on these retailers.

“Their absolute dishonesty in claiming that these companies did not want to pay their fair share of property taxes is particularly appalling,” Cobb said. “To blame retail businesses for skirting the law or their tax obligations is entirely false. It’s this type of deceitful behavior that leaves the public doubting the competency of some public officials.”

Justice Dan Biles, writing for the state Supreme Court, said the highly contested issue boiled down to deciding whether appraisals relying on build-to-suit lease data was admissible in Kansas. BOTA, relying on a 2012 state Court of Appeals decision in the Prieb Properties case, determined rental rates from commercial leases weren’t reflective of market conditions.

“We (state Supreme Court) hold Prieb’s rationale invades BOTA’s longstanding province as the fact finder in the statutory process for appraising real property at its fair market value,” Biles wrote. “By following Prieb, BOTA imposed an exclusionary rule on the county’s evidence rather than simply considering its weight and credibility.”

The state Supreme Court remanded the case to BOTA and instructed that board to evaluate the county’s evidence without Prieb’s constraints.

“Though BOTA may reach the same result on remand, that decision must be based on its own determinations of the facts and witness credibility,” Biles wrote.

California: Property Value Decrease is Reviewable

There’s an important date that will allow property owners to file an application that may allow for a decrease in their property tax because of a decrease in the value of the very same property.

The date is July 2, and it’s for filing a Decline-in-Value Review. For those unaware of what a Decline-In-Value Review entails the following information should be helpful. Furthermore, the 2022 Decline-in-Value filing period is July 2, 2022, through November 30, 2022. Applications will be available beginning on July 2, 2022. For more information, visit: www.assessor.lacounty.gov/div

California’s Proposition 13 established the base year value for property tax assessment. It also caps the growth of a property’s assessed value at no more than two percent a year unless the market value of a property falls below the base year value.

In 1978, California voters passed Proposition 8, a constitutional amendment that allows a temporary reduction in assessed value when a property suffers a “decline-in-value.” A decline-in-value occurs when the current market value of a property is less than the current assessed value as of January 1.

The office of the Assessor mailed over 59,000 Decline-in-Value review notifications to property owners with existing reductions in 2021. Additionally, over 1,400 Decline-in-Value review notifications were sent to commercial property owners. These commercial properties, likely impacted by the COVID-19 pandemic, were reviewed proactively by the Assessor for possible reductions in assessed value for 2021.

You must file a Decline-in-Value Review Application form (RP-87) with the Assessor between July 2 and November 30 for the fiscal year beginning on July 1. Applications are valid if postmarked by November 30. If November 30 falls on a Saturday, Sunday, or a legal holiday, an application is valid if either filed or postmarked by the next business day.

You must demonstrate that on January 1, the market value of your property was less than its current assessed value.

On your claim form, provide the Assessor with information that supports your opinion that the market value for your property is less than the assessed value. The best supporting documentation is information on sales of comparable properties. You should select two comparable sales that sold as close to January 1 as possible, but no later than March 31.

You may query the Assessor’s database for sales in your neighborhood by visiting the Property Assessment Information System. While the submission of comparable sales is helpful for the Assessor in determining the market value of your property, applications submitted without comparable sales will be accepted and processed.

If the market value as of January 1 is less than the trended base value, your assessed value will be lowered to the market value for the fiscal year beginning on July 1. The adjusted value will be reflected on your annual tax bill.

If the current market value is higher than the trended base value, no change in the assessed value will be made. Property owners are encouraged to review the Assessor’s website, assessor.lacounty.gov/div, for more information about Decline-in-Value and how property value is assessed.

Arizona: 8% property tax cut approved for Maricopa County homeowners

The Maricopa County Board of Supervisors approved cutting property taxes by 8% to help with inflation.

Good news for Valley homeowners who have seen the value of their homes skyrocket in the last couple of years. The Maricopa County Board of Supervisors approved a cut to property taxes. The approved primary tax cut will be the county’s largest decrease in 40 years. “I think it’s helpful,” Valley broker Eugene Quackenbush with Get Your Nest said.

With inflation at a 40-year high, the board decided to cut taxes to help the 4.5 million residents stay afloat. Though it isn’t a significant change, Quackenbush says it’s a step in the right direction. “If you have a home that hasn’t been reassessed in a year and the value went up to $100,000 then you are seeing a good size increase on your property tax,” Quackenbush said.

Right now, the county’s primary tax rate is at 1.35%. The tax cut approval will drop that to 1.25. That’s $125 per $100,000 dollars of home value. “So, you will save about $10 per hundred thousand dollars,” Quackenbush said.

On a $400,000 home, for example, the new tax would be $500, saving the homeowner around $40 compared to the old tax rate. “It is something. All of those hundreds of dollars add up,” Quackenbush said.

“People’s home evaluations have gone up so one of the things we can do as supervisors is make sure we can help alleviate those concerns and one of the ways of doing that is by cutting the rate,” Maricopa County Supervisor for District 2 Thomas Galvin said.

Galvin says this cut will not impact local school funding. “Still the largest part of your property tax, your total property tax goes to the school district and that’s how we pay for schools and for education is through these property taxes. So, what we are only cutting now is the rate that applies to your home but still the large part, the other part of your property tax for schools is not being changed,” Galvin said.

This budget was approved for fiscal year 2023, meaning homeowners will start noticing the change next month through June of 2023.

EUROPE

Greece: Cross-checking of property assets may raise dues

The interconnection of the National Cadaster with the tax authorities will allow the Independent Authority for Public Revenue to identify all the real estate assets owned by taxpayers. However, this may entail additional tax for several owners.

The IAPR will cross-check data on tax declarations (the E9 forms) with statements in the Cadaster, so as to correct any discrepancies and reveal any differences regarding the assets individuals have declared as well as any claims of disputed plots between citizens and the state.

Sources explain that the interconnection may reveal cases of foul play with the E9 forms aimed at evading tax payment; owners will be asked to submit correction declarations, without any other penalty than the 100 euros for the uploading of delayed statements, as the law provides.

Nevertheless, the cross-checking will reveal differences in the data on property size submitted to the Cadaster and the tax authorities, and owners will then be asked to pay the tax due plus the penalties the law dictates.

Crucially, those who fail to submit correction declarations will not only face extra tax and penalties, but also hefty fines.

Greece: Owners challenge property tax

More than a thousand property owners in Greece are about to take recourse to the courts against their Single Property Tax (ENFIA) bill, as the government has already conceded that there have been some errors in their calculation.

Approximately 1,500 property owners who saw this year’s ENFIA rise sharply have filed complaints with the Tax Dispute Arbitration Department. The owners in question cite the large increase in zoning prices in the areas where they own their properties, which led to the increase in ENFIA. They also talk about prices that do not correspond to reality, as there were no contracts that show the conditions and trends that prevail in the market.

Naturally, these appeals will be dismissed, as there is no getting around the legislation. The agencies responsible for the new zone rates followed the law to the letter, resulting in large increases in some areas.

Those appealing know that. However, the arbitration department is the stepping stone for them to take their challenge to the administrative courts.

After four months (which is the maximum decision period for the arbitration), i.e. in October, they can appeal to the Administrative Court of First Instance, in order to create the conditions for conducting a pilot trial at the Council of State, which will also judge the constitutionality of the new regulations.

There are also many owners who are reacting to the new law on ENFIA, arguing that it burdens those who have properties worth more than 400,000 euros each by tens of thousands of euros per year, compared to owners who own property of equal value, but distributed among more properties of lower value each, but also those with assets exceeding €500,000, combined with large increases in property values in some areas and especially (unprofitable) urban plots, leading to literally huge tax charges.

Prime Minister Kyriakos Mitsotakis recently spoke about errors in ENFIA which must be corrected. The services of the ministry have collected data from various regions of Greece where extreme hikes were noted. However, it has not yet been decided how they will be dealt with.

Germany overhauls property tax system

Anyone who owns property in Germany pays an annual property tax (Grundsteuer) on its assessed value. However, with the system criticised in recent years as hopelessly outdated, the property tax is undergoing a major reform from 2022. Here’s what homeowners and renters need to know.

What is the property tax (Grundsteuer) in Germany?

If you own one of the 36 million properties in Germany, you have to pay taxes on it each year to your local tax office. This property tax (Grundsteuer) is calculated according to the value of the property and the buildings or business operations that stand on it. This value is multiplied by the local tax rate to provide the total tax amount.

If you buy a house in Germany, you as the homeowner are liable to pay property taxes on it. If you rent as a tenant, your landlord may pass the property tax onto you via your utility bills. The tax is an important source of income for municipalities in Germany, bringing in around 15 billion euros each year.

Why is the property tax being reformed?

The reform has been a long time coming: the property values currently used to calculate the tax date from 1964 in the western federal states and as far back as 1935 in the eastern states. Back then, property tax was based on so-called unit values that only took into account the size of the property, and not its location.

Understandably, there has been plenty of criticism that this data no longer has any real bearing on the current state of the real estate market, since prices have developed very differently in different areas over the past few decades. Despite this, property taxes have so far remained the same.

Then, in 2018, the Federal Constitutional Court ruled that the current system used for assessing property tax rates treats similar properties differently and therefore violates the principle of equal treatment enshrined in the Basic Law. The court, therefore, called for the tax to be reformed.

In a major overhaul, property values are now set to be recalculated between 2022 and 2025, before the new tax rate comes into effect on January 1, 2025.

How will the new real estate tax be calculated?

The new property tax will take multiple different factors into account to determine a property’s value, including the value of the land and the (theoretical) net cold rent, as well as the area of the property, the type of property, and the age of any buildings on the property. The figure will then be multiplied first by a tax index and then by the local tax rate to calculate the overall property tax.

It’s not clear yet how high your property tax will be after January 1, 2025. This will only be decided when property valuations have been completed and the assessment rates calculated. The Federal Finance Ministry doesn’t expect this to happen before autumn 2024.

What do homeowners need to do?

To make these calculations, the tax offices need quite a bit of up-to-date information about properties all across Germany. Between July 1 and October 31, 2022, all property owners in Germany are therefore required to submit a tax return for their properties and land in Germany. Most federal states have already informed property owners in writing about this requirement.

In general, owners need to provide information about their property’s:

• Location
• Property area in square metres
• Land value
• Building type
• Living / useable area
• Year of construction

In the states of Baden-Württemberg, Bavaria, Hamburg, Hesse and Lower Saxony, the exact information requirements are slightly different, but the same general principles apply.

You will be able to find information about your property in the extract from the land register, the tax notice you usually receive from the municipality, the construction documents, or even the purchase contract concluded when you bought the property. The average land value will be made available via the BORIS portal.

From July 1, 2022, it will be possible to submit this information to the tax office via ELSTER. You need to do this by October 31, 2022 to avoid facing a fine.

Are renters affected by the changes?

Tenants will not have to do anything themselves, but from 2025 onwards they may see their ancillary costs increase, as landlords are permitted by law to pass the new property tax onto their tenants.

United Kingdom: Scotland’s property tax system ‘penalises’ high street

A leading academic on retail studies has hammered home the need to radically reform Scotland’s business rates system, branding it a “historical anachronism”.

Leigh Sparks, professor of retail studies at the University of Stirling, told The Herald that there is an urgent need to change taxation policy to help drive the recovery of Scotland’s country’s town and city centres.

Professor Sparks, who recently wrote and chaired the A New Future for Scotland’s Town Centres report for the Scottish Government, said: “You have got a system that penalises high streets; penalises businesses that want to renovate properties, and privileges those that want to build new buildings on greenfield sites, and want to trade online.

“For me, if you think about the national performance framework, [and] the aims the Scottish Government has, then there will come a point they have to have the non-domestic rates system working in alignment with national policies. Currently for me they are not.”

The comments from professor Sparks come amid renewed focus on business rates in Scotland, with firms in the retail, hospitality and leisure sectors poised to pay the local authority property tax in full again following a period of relief due to the pandemic.

Some critics say the business rates system, a form of local taxation firms pay based on the rateable value of their premises, has become out of date given the huge shift to online retailing in recent years.

The hospitality sector argues it is treated unfairly by the current system because assessors use a hypothetical turnover figure in arriving at their bills, which the industry argues does not accurately reflect how profitable businesses are and how much they can afford to pay.

A New Future for Scotland’s Town Centres recommends amending the rates system and changes to value-added tax, the latter to encourage the redevelopment of existing buildings in town centres. It also suggests the introduction of a digital tax, an out-of-town car parking space levy and a moratorium on out-of-town development to help stimulate the high street.

Professor Sparks said: “We need to think about what element of a property tax we should have, we need to change both property taxes for in-town and out-of-town, we need to think about VAT on renovations and in-town businesses, and we need to think about [a] sales or online tax.

“It is the balance and mix of all of those together which reflect the nature of the economy.

“If you have got 25 per cent of retail sales now going online, and the taxation system isn’t catching up with that, then your taxation base doesn’t reflect the economic realities. And that I think is a problem for any government in the longer term because that will continue to privilege that (online) type of business.”

He added: “There comes a point where you have to ask big questions of rates, and that will come in the next few years I think.”

The idea of an online sales tax has attracted support from leading business figures such as Sir Tom Hunter. Although he admits it is a “thorny issue”, Sir Tom contends that there should be a “level playing field” between high street and online retailers.

Stuart Mackinnon, head of communications and public affairs at the Federation of Small Businesses, expressed caution over the move, noting that it could undermine small firms that had moved into online retailing to stay afloat during the pandemic.

“We would not like to see businesses that pivoted online during the disruption of the last three years punished,” Mr Mackinnon said.

The Scottish Government is in the process of making some changes to the business rates system, which flowed from the Barclay Review in 2017. Among the biggest changes will be to increase the frequency of valuations from every five years to every three to help ensure property values better reflect prevailing market conditions.

Changes have also been made to streamline the appeals process. These reforms will come into place next year, when the next revaluation of non-domestic property takes place.

Mr Mackinnon said: “Barclay has initiated a number of changes which will come to fruition next year. It will be a test of his reforms whether they will stand up to the stresses of the next revaluation.”

Professor Sparks expects the Scottish Government to focus in the short term on bedding in such changes, and on addressing the “data gaps” he said had been thrown up a report by the Fraser of Allander Institute on the small business bonus scheme.

He suggested that there may be a reluctance among politicians to interfere with business rates because there is a “predictability” of how much they raise, which in turn gives certainty to “what they can afford and can’t afford to do”.

Professor Sparks added: “The second element is there is not a lot of votes in non-domestic rates. People don’t get too exercised about it – it is not something everyone is campaigning about. The business owners clearly do. It is trying to make that link to… the good things (they are trying to do) in town centres.

“Businesses are often fighting with one hand tied behind their back because of the system. It is trying to get that point over as something people treat really seriously. We have lost a lot of things because it is so much more expensive to work in town centres.”

Meanwhile, Scottish Retail Consortium David Lonsdale has voiced disquiet over the recent signal from the Scottish Government that it plans to raise the poundage – a figure of pence in the pound multiplied by property valuations to calculate rates bills – north the Border.

In a spending review and medium-term financial strategy published at the end of last month, the government said an increase in the poundage “would be required” to ensure the next revaluation of non-domestic property is revenue-neutral in real terms.

Ministers said this was because the non-domestic rates deficit had increased “due to relief provided through the pandemic support and other factors including higher-than-expected levels of NDR income lost to write-offs, bad debts following Covid-19 and emerging 2017 revaluation appeals losses”.

Mr Lonsdale said: “The prospect of a further increase in the business rate, which is already at a 23-year high, sounds ominous and will set alarm bells ringing across retail and other sectors with a significant property footprint in Scotland.

“A further rates hike next Spring, immediately following revaluation when it normally falls, is unnerving. The only fixed point in a world of flux for retail seems to be rising supply-chain and government-imposed costs, which are increasingly difficult to absorb and ultimately add to the pressure on shop prices.

“A shift in mindset is needed on business rates, with a switch from trying to squeeze tax revenues from commercial properties to one which encourages investment into retail destinations.”

United Kingdom: Business rates and online sales tax – reviews and rows but what hope of a resolution?

Where are we with business rates?

As retailers battle the increasing costs of doing business, they still bear one of their longest-suffered and biggest burdens – business rates.

There has been a blizzard of reviews, the debate has been diverted by focusing on a possible online sales tax, and now renewed economic and political upheaval following the resignation of Boris Johnson may turn the spotlight elsewhere.

So, where do things stand at this moment in time?

Business rates reviewed

A ‘fundamental review’ of the business rates system was carried out last year but retail’s hopes of a radical overhaul were dashed. There had been optimism that the government was willing finally to grasp the nettle and adopt ambitious reforms. But the impact of the pandemic and the turmoil it heralded sent rates hurtling down the queue of priorities in Westminster. It did lead, however, to some welcome changes, including more frequent revaluations.

The review sparked further consultations, such as on the mechanics of more frequent revaluations and the potential for improvement reliefs. In the past, property owners were sometimes reluctant to improve assets, for example by making buildings more sustainable, because that would lead to higher rates. Such obstacles to regeneration could become less obstructive.

There is another consultation on the statutory revaluation. It could prove important because revaluation is based upon antecedents – in this case, the reference point is April 1, 2021, coinciding with the end of lockdown. One industry source says it is “not clear how it will play out”. On one hand, factors such as lower retail rents during the pandemic may benefit retailers. On the other, a revaluation based on “an extraordinary point in time” could mean a disrupted picture bringing unexpected and unwelcome results.

A consultation on transitional relief is also ongoing. Through trade body the British Retail Consortium, retailers are campaigning for downward phasing to be abolished so that businesses benefit from rapid relief from any reduction in the burden they bear.

Finally, a consultation on the potential introduction of an online sales tax has just been brought to a close. The government was primarily interested in hearing views on the idea. A response to the consultation is expected in the autumn, perhaps around the time of the Budget.

Online sales tax – for and against

The online sales tax has proved a lightning rod, drawing comment and argument for and against from a retail industry that has been split down the middle on its merits.

Big names such as Tesco and Kingfisher are open to the idea, believing that the imposition of such a tax could facilitate rates reform, while other leading retailers from Amazon to Marks & Spencer oppose the idea.

The conflation of the debate is unhelpful. Resentment about the amount of UK tax Amazon pays generally has led to the arguments for rates reform being subsumed in another, bigger issue.

Viewing taxation, and online giants’ responsibilities, primarily through the prism of business rates diverts attention from the merits of desperately needed rates reform in its own right and brings additional dangers.

If an online sales tax was introduced, there is no guarantee that retailers would not end up paying that too – on top of their already cumbersome business rates bills.

There is no guarantee, either, that the imposition of an online sales tax would hit the tech-driven giants in the way some hope. In an environment where marketplaces like Amazon and eBay are ever more important, would the platform bear the bulk of a tax, or would it fall upon the retailers that trade on that website to foot the bill? That would hit big names as well as small businesses, which have grown through their use of Amazon and other online platforms.

Authors:

• Paul Sanderson, President | psanderson[at]ipti.org
• Jerry Grad, Chief Executive Officer | jgrad[at]ipti.org
• Carlos Resendes, Director | cresendes[at]ipti.org

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