Member News

Update on Property Tax Issues in Europe and the US: IPTI report October 2016

The EACC in partnership with the International Property Tax Institute (IPTI) wants to keep our members up to date with the latest developments in property taxes both in the USA and Europe.

IPTI has put together a selection of reports from articles contained in IPTI Xtracts. The reports cover France, Germany, Greece, Portugal, Ukraine, the United Kingdom, and the United States with a focus on New York.

France: Don’t miss your upcoming tax deadlines in France
The deadline for paying your income tax bill in France may have passed but there are other taxes that need to be paid tout de suite. We hope you have all paid your 2015 income tax bills by now, given that the deadline for paying by cheque or bank transfer was back on September 15th. But while you can tick that particular box in your “to do” list of French admin tasks, there are others that need your attention. Here are the deadlines you need to beat to avoid having to pay a 10 percent increase for late-payment.

Taxe foncière
Home or land owners will have to pay their taxe foncière by October 17th, by either cheque, TIP payment or by cash. However for those paying on line the deadline is slightly later on October 22nd. The sum will be taken from your account on October 27th. The taxe foncière is a property tax that is paid to the local authority, whether the commune or department and goes towards the funding of local services. It is payable by anyone who owns a property on January 1st of any given year and is calculated on the basis of how much the property could be rented out for, multiplied by a percentage rate set by the local council. Home owners in France have to pay whether or their house is occupied or not.

A report earlier this year revealed that the levels of the taxe foncière had risen sharply in some regions around the country. The French tax man takes his taxe foncière very seriously. The Local reported recently how the mayor of the seaside town of Sarzeau said he had received a letter from the public finance offices to a dead resident, addressed to “grave 24, row E, cemetery road”.

Taxe d’habitation
The deadline for paying your taxe d’habitation is on November 15th and you should be receiving your bills via email or the post any day now, if not already. The tax is a residence tax, paid for by anyone living in a property, whether you’re the owner or just renting it. For those paying online or through the government app, the deadline is slightly later on November 20th. If you have set up automatic payments then the amount of tax you owner will be taken from your bank account on November 25th. Some tax payers may find that they have until December 15th to pay their taxe d’habitation and TV license. In all cases the deadline date will be written on the bill.

Contribution à l’audiovisuel public/Contribution to public broadcasting
This is the French equivalent of a TV license and the bills are sent out along with the taxe d’habitation bills. The tax for owning a TV in France in 2016 is €137. The deadlines for payment are the same as for the taxe d’habitation – November 15th for payment by cheque or transfer or November 20th for payments made online.

Taxes on vacant properties
Anyone who qualifies to pay a tax on their empty property (basically it’s only applied in certain urban areas where the demand for housing outweighs the number available) will have until December 15th or December 20th if you are paying online.

France: Homeowners in France hit by jump in property taxes
Property taxes, known as “taxes foncières” in France, have rocketed over the last few years, a new report found.  Between 2010 and 2015 property taxes in France, known as “taxes foncières”, shot up by an average of 14.70 percent. Some areas were particularly hard hit, including Clermont Ferrand in central France with a rise of 20.29 percent and Lille in the north which saw a 19 percent increase. While the increase might sound harsh, the French landlords union UNPI noted that it was a big improvement from the 21.17 increase between 2007 and 2012. Thursday’s report from the UNPI noted that between 2010 and 2015, inflation rose by 4.97 percent and the hourly minimum wage by 7.44 percent. As for this year, some 35 departments saw an increase since 2015, compared to just 11 in the same report from last year. According to UNPI, the surge in property tax rates is down to the accumulation of various increases imposed separately by regional departments, municipalities (communes) or groups of municipalities (groupements de communes).

This year home or land owners will have to pay their taxe foncière by October 17th, by either cheque, TIP payment or by cash. However for those paying on line the deadline is slightly later on October 22nd. The sum will be taken from your account on October 27th. The taxe foncière is a property tax that is paid to the local authority, whether the commune or department and goes towards the funding of local services. It is payable by anyone who owns a property on January 1st of any given year and is calculated on the basis of how much the property could be rented out for, multiplied by a percentage rate set by the local council. Home owners in France have to pay whether or their house is occupied or not.

Germany: To Raise Property Taxes Significantly
The greatest problem with real estate is you cannot pick up and leave. The Federal Council in Germany is planning to re-evaluate the approximately 35 million homes in Germany. It is now expected that the result is likely to be a significant increase in the property tax.  Administrative expenses for the state fund-raising action is very significant and more than 50% of municipalities were in financial trouble BEFORE the refugee crisis. This is the final stage of property before capital begins to shift to equities. The significant difference appears before a major crisis or Dark Age event. The property becomes the target of taxation and as taxes become insane, property values decline. The end game is people just leave.  This is how what use to be vibrant places to live become ghettos. If the cycle become extensive and people migrate just walking away, you go through the phase such as Detroit and move on to situations like Rome. They have no choice but to abandon the property.  This can be created by excessive taxation or political instability such as an invasion.

Greece: ENFIA property tax takes centre stage in Greek politics
Greece’s ENFIA property tax has taken centre stage this month, following Alexis Tsipras’ announcement that the levy will remain in force in 2017. Originally introduced in 2011 by the government, the controversial tax was intended to help refill the country’s empty coffers and boost the economic recovery. Since then, Greece’s economy has been through several major changes, as the country has fought to secure continuing bailouts from the European Commission and IMF. Amid the debates, Prime Minister Alexis Tsipras rising to power on the back of an anti-austerity ticket that included a pledge in 2015 to scrap the unpopular tax altogether. Now, though, he has revealed that the country’s first regular property tax, once forecast to generate around 2 billion euros a year for the economy, is going nowhere just yet. Speaking at the 81st Thessaloniki International Fair, the Greek Prime Minister confirmed that ENFIA will be in force for 2017, although he added that the government would lower tax burdens for citizens from 2018 onwards. “I understand that the lower social groups have exhausted their tax giving ability.” he said, citing the country’s economic growth as the driving force behind their ability to lower taxes in 2018. Tsipras said that the introduction of plastic money, the creation of an exclusive account for paying suppliers, payrolls and social security and tax payments would, as well as reigniting stalled construction and infrastructure projects, would help the economy to recover. At the same time, Kyriakos Mitsotakis, the leader of opposition party New Democracy, has promised to cut ENFIA, if his party were to be elected. In an interview with Skai TV, he said that the ENFIA fee would be reduced by 30 per cent over the next two years.

“It is something that is feasible and has been calculated,” he commented, also promising not to lay off public servants and calling for early elections.  “It is no surprise Mitsotakis chose this out of so many taxes to demonstrate his intention to scale back the magnitude of levies taxpayers must pay,” observes Greek news publication Ekathimerini. “ENFIA has become synonymous with the extra tax burden Greeks have to bear on their journey out of the country’s long economic crisis.”

Portugal: New property tax controversy
The normal route might have been for Finance Minister Mário Centeno to unveil a new proposed property tax on 15 October along with the 2017 budget proposal. Instead, Left Bloc MP Mariana Mortágua this week took the lead and publicly released plans of new wealth tax on real estate. The proposal was disclosed as the real estate market, one of the biggest victims of the financial crisis in Portugal, showed signs of strong recovery, with average property prices recording yet another increase, rising 6.3 percent during the second quarter of 2016.

The proposed tax is aimed at revising annual property taxes and will see homeowners taxed in accordance with their real estate portfolio.
Mariana Mortágua, who is fast becoming one of Portugal’s most notable politicians having just turned 30, was targeted this week from several quarters after revealing details of the property tax which will be contained in next year’s budget.

Families or investors whose accumulated property amount to more than 500,000 euros, are the target of the new tax. The planned tax has been criticised by the opposition, tourism officials and real estate associations, mostly as they argue it will scare off potential investors. But Mortágua said later that should the new property tax come into force, it will only affect 43,000 taxpayers. “We are only speaking of one percent of the population, the wealthiest”, she said on Wednesday evening, while also justifying her actions in breaking the news to the public.
According to the Left Bloc MP, the announcement of the new property tax was made in agreement with the government, and was not a cheap trick to gain additional prominence for herself and her party. The first fortnightly debate of the post-summer legislative period is expected to be rather heated, with the issue of property tax featuring on the agenda for this coming Friday’s parliamentary session. Earlier in the week, both the Social Democrats (PSD) and the People’s Party (CDS) reacted to Mariana Mortágua informing the public of the new tax. “It is about time the Prime Minister restores order”, said CDS MP Nuno Magalhães in reference to Mortágua speaking on behalf of the government, while PSD spokesperson Jorge Moreira da Silva also went on the attack. “I warned during election campaigning that we should not have the leaders of the Communist Party and Left Bloc as deputy prime ministers. But I never imagined that Mariana Mortágua would assume the role of finance minister.”
Associations representing Portuguese estate agents, construction companies and property owners have in the meantime also joined in criticism of the proposed tax. The tax will be progressive and be levied alongside the Council Tax (IMI).
Luís Lima, the president of the APEMIP estate agents’ association, said the tax is an “attack on the middle class, even if it appears to be an attack on wealthier property owners”, adding it would result in the “death of the urban rental market”.
“The only ones who will not be affected are precisely the rich, who have the capacity to distribute their various assets in such a way that they will never be affected.”

The Portuguese Confederation of Construction and Property (CPCI) in comments to Lusa News Agency said that the debate on the 2017 state budget “could not have started in a worse way” and expressed regret at what it called “political strategies” resulting in an “increase in taxation on families, the reduction of investment and serious effects on economic activity.” Similarly, the Algarve’s largest hotel association AHETA has slammed the proposed tax arguing it would scare off potential investors, particularly in the residential tourism market. This Friday’s parliamentary session is meanwhile set to be dominated by property taxes.
The PSD and CDS have tabled a request to examine the government’s intention to tax properties in accordance with their solar exposure, views and location close to amenities as revealed at the beginning of August, with the latest wealth tax set to also feature heavily the session.

Ukraine: Hundreds of thousands of Ukrainians have to pay property tax
For 2015 taxed 354 of thousands of properties. Expected income tax in 2016 amount to more than UAH 250 million

Real estate tax this year will have to pay 350 thousand Ukrainians who own a living space in excess of established standards. This was the “Today” reported in the fiscal service. Recall from July 1 in Ukraine entered into force the law on the collection of tax from owners of apartments over 60 square meters and houses more than 120 sq. m. According to fiscal service 2015 taxed 354 of thousands of properties. Since the law came into force at the end of September 2016 holders of surplusage paid 149 million UAH “luxury tax”. But, according to the speaker of the SFS Hopes Veselova, it is only those funds that managed to transfer taxpayers. Expected income tax in 2016 are more than 250 million UAH”, — reported in Department. At the same time, a number of experts believes that the law is not effective, and its introduction in Ukraine, nothing will change: the rich, they say, will continue to evade taxes for their “palaces” and “luxury tax” would be charged with ordinary citizens. “This tax should be abolished — says economist Alexander Okhrimenko. — He brings no income. The country’s budget is measured in billions, and the $ 250 million against this background, the miserable pennies that will not affect the budget. I think that even the administration of this tax (salaries of employees of the SFS. — Ed.) requires a lot of money. Granny in the market — and then pay more taxes.”

As reported, the tax rate determined by local councils, it may not be higher than 2% of the minimum wage in 2016 and 3% in 2017. for Example, in Odessa region the rate was 29 UAH per square. m, in the Lviv — 7,25 UAH, and in most regions — 14,5 UAH.

UK: Bosses and trade unions on the British Steel works seek parity over business rate cuts
BOSSES and trade unions on the British Steel works in Scunthorpe are seeking parity with the Port Talbot site in Wales over cuts in business rates. From next April the Port Talbot works owned by the Indian company Tata Steel will see its bill cut by £1.7 million a year. The move follows the decision by the Welsh Assembly to pass on cuts to business rates immediately. Whereas the similar-sized Scunthorpe site will receive an estimated cut of £360,641 next year and will have to wait for the full reduction to be phased in over four years. Paul McBean, the chairman of the town’ steel multi-union committee, said: “We’re continuing to press the line that government must act to take plant and machinery out of rates calculations because it’s anti-investment and severely impacts our competitiveness “. “Currently we pay up to 10 times more in rates than our competitors in France and Germany.

“The revaluation of business rates for England and Wales that has just been completed by the Valuation Office and will be used to calculate business rate bills from April 1 2017. “It’s been forecast that the ten steel plants in England will eventually see a £5.4 million-a-year drop in bills.

“Wales has implemented these changes straight away, whereas England will spread these across four years, mostly to limit the impact of companies whose rates are increasing – predominately in London. “This revaluation is obviously welcome, however it does not necessarily stop business rates going up in future years, and if companies invest in plant and machinery this will increase companies rates. Roland Junck, British Steel’s executive chairman, said: “Business rates have a significant impact on capital intensive firms like ours, particularly in Britain. “That is why we have been lobbying the UK government for action on business rates in an effort to bring us in line with our competitors in France and Germany.

“We face much higher business rates than many of our global competitors, some of whom do not pay any at all. This, coupled with the higher energy costs we pay in this country, means we are operating in an even more challenging environment. “I’m pleased to say that although we are a new business, we are already making a profit and that is largely down to the incredible efforts of our employees. However, to be truly sustainable, we do need more government support. “For example we pay around £13 million a year alone in business rates for our Scunthorpe site, and for any business that is a substantial amount. “I’m sure the move by the Welsh Assembly will be welcomed by its country’s steelworkers. It demonstrates the type of support our steel industry needs. “We want to increase productivity and increase our global competitiveness but all we are asking for is a level playing field. A reduction in business rates for us would be a significant step in the right direction.”

UK: Sage boss says axe business rates – they suffocate firms – and replace them with sales tax
The chief executive of FTSE giant Sage has called for business rates to be scrapped and replaced with a sales tax. Stephen Kelly left his role as chief operating officer for the Government in November 2014 to lead The Sage Group, which sells business services and software to 3million of Britain’s 5.4million firms. Its services and software range from accounting and payroll to customer relationship management and payments. He told The Mail on Sunday he wanted the firm to ‘be the voice’ on issues its customers face, and blasted the property-based tax system for ‘suffocating’ small firms. He said the problem was ‘particularly relevant coming up to the Autumn Statement’, which Chancellor Philip Hammond will present on November 23. ‘Any small business on the high street has got an anchor around its neck called business rates, which are horrible fixed costs,’ he said at the company’s headquarters in The Shard, Central London. A hairdresser in Kingston, South West London, might have business rates of £100,000 a year, for example, but ‘when you look at the number of haircuts needed before those business rates are paid, it really suffocates growth. ‘Before the digital age and the internet revolution, it was probably a good way to collect taxes, based on property. But it makes no sense when bricks and mortar have no role, and companies like Amazon compete with small and medium-sized businesses on the high street on a very unlevel playing field.’ Ahead of the Budget in March, Sage president Brendan Flattery said small firms had been unequivocal that rates were their top concern. It was announced in the Budget that more than 600,000 small firms would be given business rate relief. Kelly said the company has written to Philip Hammond. The former Chancellor, George Osborne, had announced reform, he said, ‘but we don’t want any tinkering around the edges, we want radical reform. ‘The genesis of business rates was in Shakespearian times. It’s a 400-year-old property based tax system. How can you have that in the digital age when it’s suffocating small and medium firms? They kick things into the long grass with “consultations”. There’s little political will. ‘The truth is, it’s a very easy tax to collect. Small and medium businesses are very auditable and they are very honest, and the system collects £22billion a year for the Exchequer. But there have to be more sensible ways to fill that gap that are relevant to the digital age.

‘I’d look at the things you can measure and collect easily, and it’s probably going to be more related to sales to even up the playing field. You’ve got to look at the fact that it is 2016 – it is a digital-based economy. There’s probably a more sensible way you could incur a tax where companies like Amazon and the multinational digital retailers pay their way.’ He also called for companies to spell out how long they take to pay suppliers so that late payers can be named and shamed. ‘Late payment creates antipathy and it undermines most small businesses. This is a constant theme for me because when I was chief operating officer for the Government, one of the things we introduced was that all small businesses got paid within 30 days, and any department that failed to meet that got fined. ‘There are only two FTSE 100 firms – us and Lloyds – which have a policy to pay small and medium-sized businesses within 30 days. In the UK it can be 60 to 75 days before small firms get paid. That is an anchor on growth and it means they have to invest lots of time chasing invoices.’

He explained: ‘I’m not a big fan of driving loads of regulation, because I think we want light touch regulation. But I think companies should have policies where they pay the little guys swiftly. You can change this, because we changed it in Government. There’s no excuse. I challenge every Footsie chief executive to say if you haven’t got your procurement director running policies that have around 30-day payments as part of your way of operating, then it’s disappointing. ‘Why should a big firm withhold payment from a small one? It lacks any moral compass. I would call for companies to codify their procurement policies. I think it will get a groundswell of momentum. What gets measured gets done, and it all comes from the tone at the top.’ Kelly, who has worked for US software giant Oracle, said it is a ‘golden era for start-ups’ in the UK. But he said there is a ‘different DNA, a different culture of ambition’ in the US. He said: ‘The confidence level of the Americans is unparalleled.’ And he complained: ‘A lot of boards in British companies become a victim of the exit conversations they have. If a board spends half its time looking at exits, then its not investing the time it should be on building the company. Why aren’t British firms going out and buying overseas companies as well?’

UK – Scotland: Retailers call for ‘fundamental’ business rates reform
Scottish retailers have called for the business rates system in Scotland to be “fundamentally reformed”, claiming up to a quarter of shops could close if the current arrangements continue. The Scottish Retail Consortium (SRC) said a new “flexible, simple and competitive” system should be created. It argued the existing system did not reflect current economic conditions. The Scottish government said it was “doing everything” within its powers to support the economy. It said that included “action to maintain a competitive business rates regime”. The call by SRC came in its submission to a review of rates which is due to report to the Scottish government in July next year. SRC was one of a number of organisations which called last month for a hike in tax rates for big firms to be reversed.

In its submission to the review, the lobby group called for regular revaluations of business premises to ensure the system “better reflects the economic conditions”, and a single assessor – instead of the current 14 – to carry out assessments. The SRC also wants to see poundage rates reduced to ensure they are “at least competitive with the rest of the UK”, as well as a commitment to set a Scotland-wide poundage rate rather than devolving that power to local authorities. The organisation said there should also be a “fundamental review” of existing exemptions, with the aim of creating a simpler and fairer system with fewer exemptions and reliefs.

‘Not sustainable’
SRC director David Lonsdale said: “We now have the opportunity to create a modern business rates system which promotes economic growth, investment and productivity. “We believe the review should create a rates system which is flexible, simple and competitive.” He added: “Scottish government figures show that 10,000 jobs and 1,700 shops have been lost in the last seven years in the industry. “In that time revenue from rates has grown by 42.5%. This is not sustainable, and without urgent reform up to a quarter of Scotland’s shops will be at risk of closure, with the consequent impact on the Scottish economy.” A Scottish government spokeswoman said: “We are doing everything within our powers to support our economy, including action to maintain a competitive business rates regime – for example, our small business bonus has already delivered over £1bn in savings for smaller firms. “We commenced an external review precisely so we could engage with business and explore how rates can better reflect economic conditions and support growth. “We warmly welcome the contributions of the business community to that process.”

UK – Northern Ireland: Executive ‘must address rates for smaller firms’
The Assembly’s Finance Committee has been told Stormont must address concerns over business rates to show it supports small firms as well as attracting big foreign investment
Stormont must address concerns over business rates to show it supports small firms as well as attracting big foreign investment, it has been claimed.  Business groups have reiterated calls to revamp rates here, which they say are a “significant financial burden on businesses, restricting growth and on occasions forcing them to close”.Addressing the Assembly’s Finance Committee, Hospitality Ulster chief executive Colin Neill and Glyn Roberts of the Northern Ireland Independent Retail Trade Association said: “While we support the devolution of corporation tax, radically reforming business rates is a much higher priority for our members.

“The Executive needs to show that it gives as much priority to supporting our sectors as it does to attracting foreign direct investment. Mr Neill and Mr Roberts added: “Both our organisations are putting forward a radical alternative to the current system of small business rate relief, which will be targeted to the independent retail and hospitality sectors. Both sectors make a huge contribution to our local economy, town centres and tourism.” They also said the alternative plan was “fully costed and involves no new expenditure to the Executive Budget”. “It is value for the taxpayer, ensuring that the businesses who need help with their rates bill the most, receive it,” they explained. Mr Neill additionally stressed that the Assembly must look at a reduction in non-domestic rates for the hospitality sector to help offset the higher rate of Vat here, compared with the 9% rate in the Republic.

Update on Property Tax Issues in the U.S.:

New York City –  LIEN SALES: In 2015, the New York City Council and Mayor Bill de Blasio enacted a law creating a temporary task force to evaluate the New York City Property Tax Lien Sale program. The Lien Sale Tax Force was comprised of representatives of the Mayor, the NYC Council, several municipal agencies whose liens on real property are eligible to be sold, and the City’s Office of Management & Budget.

The Program, enacted into law in 1996, authorizes the City to sell delinquent tax liens. The lien sale legislation enabled the City to package large numbers of liens and sell them—collateralized by the underlying real estate—to a Delaware trust.  Bonds in the trust are sold to investors and the City a cash advance for the liens.  The Trust then engages in collection efforts to obtain the funds necessary to retire the bonds, with any residual collection going to the city.  If need be, the Trust can maintain foreclosure proceedings and ultimately sell off the real estate just as if it was a foreclosing lender.

Prior to 1996, the City would foreclose upon and take title to the real estate itself in an attempt to satisfy delinquent taxes, a process known as “In Rem Foreclosure”. The foreclosure process sometimes had negative consequences for the City, in that it ended up with marginal properties on its books, managerial burdens, and the inability to easily or successfully liquidate such properties.  On the other hand, the City has found that by placing properties on its annual list of liens to be sold, a great deal of taxes has been collected in the run-up to the day of the lien sale.

The Lien Sale Task Force has just issued its findings. Its essential conclusion is the Program has been a success overall, especially with recent improvements regarding transparency and greater taxpayer outreach.  The Task Force is strongly recommending that the program be re-authorized beyond its December 2016 expiration, and that the following changes be implemented:

  • Minimize the number of liens that end up being sold, by offering better and more affordable payment options and incentives to taxpayers
  • Establish lower interest rates for unpaid taxes (which are currently up to 18%), to encourage payment rather than build-up of tax debt
  • Expand outreach and education
  • Improve notification of liens and delinquencies
  • Provide flexibility to taxpayers who show good faith in trying to meet their tax obligations

CORRECTION OF ERRORS: In the recent court decision of Rotunda Realty Corp. vs. City of New York, the Supreme Court for New York County Manhattan) ruled that, even though a property had been misclassified for property tax purposes in a manner that deprived it of as-of-right limits on its taxes for a period of 28 years, the City would be required to roll back taxes for only six years, because to do otherwise “would effectively rewrite history”.

Elsewhere in New York State –
FIBER OPTIC CABLE—IS IT TAXABLE REAL PROPERTY? In the recent court decision in Level 3 Communications vs. Clinton County, the plaintiff telecommunications company sought a declaration from the court that its fiber optic installations were not taxable as real property. The lower court ruled that such installations were taxable real property under New York State law.  The lower court also ruled that even if plaintiff prevailed on the issue of taxability, it was not entitled to tax refunds because it had paid the taxes voluntary.

The telecom company appealed. The Appellate Division of the New York State court system reversed on the issue of taxability, finding that while fiber optic cables “undeniably transmit light”, they do not “distribute” it, as required by state law for inclusion in the category of taxable real property.  The Appellate court went on to opine that since the state legislature was aware of fiber optic technology when the specific tax law was amended, it would have included fiber optic transmission lines as taxable had it desired to do so.  Despite this reversal, the denial of tax refunds was upheld, on the rationale that appropriate legal notice had not been given to the government and that the taxes were not paid under protest.

 

Around the U.S.-
UNIVERSITY EXEMPTIONS: We recently reported on an assault on the entitlement of hospitals to property tax exemptions in the State of New Jersey. In somewhat of a parallel, Princeton University, one of the wealthiest Ivy League universities in America, with a $22 billion endowment—and also located in New Jersey—was the subject of a lawsuit commenced in 2011 by a group of its neighbors who charged that that their property taxes were higher than they should have been because Princeton U. received a large non-profit property tax exemption.

Despite the fact that Princeton had already been making voluntary payments-in-lieu-of-taxes to the community, it has agreed to a settlement of the litigation, in which it will pay an additional $18 million through 2022, with $10 million of that sum going to 869 neighboring homeowners.

TAX SWAP? A property tax reform law known as Act 388 was passed in the State legislature of South Carolina back in 2006. Act 388 called for the removal of school operating expenses from the property tax bills of owner-occupied homes.  An increase in state sales tax—by a penny-on-the-dollar to six cents—was to be the mechanism in the law that would pay for the property tax cut. But according to some reports, the tax swap has not worked out, in that it has failed to generate sufficient additional sales tax to close the fiscal gap, placed additional pressure on local businesses that charge those sales taxes, and put rental properties at a competitive disadvantage with owner-occupied properties.
TAX SWAP PART TWO: A proposed amendment to the Missouri State Constitution would prevent sales and use taxes (“SUT”) on a variety of services—including certain real estate transactions, veterinary services, grain storage, haircuts and lawnmower repairs—from being charged unless those services were already taxable as of January 1, 2015.

There is concern on both sides, as businesses see what is known as “Amendment 4” as a mean to stay competitive and profitable, whereas opponents are worried that without sales/use tax flexibility, the government may be forced to raise not only whatever SUT are still allowable, but property taxes as well.

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