Valuation Banding- An International Property Tax Solution?

Since 1993 Britain has used a ëbandedí property tax as opposed to discrete values for the assessment of residential property. The expressed views of the British Government on its operational worth as a means of assessing and administering a residential property tax are examined and the possibilities of reviewing and revaluating the tax base are explored. In summary, the purpose of this paper is to present findings on the operation of this unique system highlighting strengths and weaknesses and its viability/applicability in other countries and jurisdictions. Initially the paper provides an empirical analysis demonstrating a number of the operational advantages and disadvantages of the system. This aspect will focus on equity issues, effective tax rate analysis and a number of administrative aspects/concerns. Since the initiatory research work was completed the research team has been afforded access to domestic property survey data in Britain as part of a new pilot project it is conducting in conjunction with the Inland Revenue Valuation Office Agency (IRVOA). This body is charged by the UK Government with the responsibility of valuing (inter alia) all real property for local and central taxation purposes. The additional data thus provided affords the opportunity for a larger geographical area of study and the paper will present these analytical findings. The paper concludes by drawing together recommendations in relation to how the system can be improved; does it represent a fair and equitable alternative approach to discrete value based systems? This part of the paper will examine the potential for such a system in other jurisdictions particularly where resources are limited in terms of experienced appraisers, availability of technology and tradition of applying ad valorem taxation. In addition, there is the opportunity to take advantage of the available technology of mass appraisal. For domestic property taxation this could entail a discrete valuation process, easily subsumable into banded allocations as and if required under the extant banded property tax system, with the added opportunity of frequent updating at minimised cost and effort.