In the period 2000-2003 municipal tax revenues rose by almost 1.3 billion euro to 6.8 billion euro, an average annual increase rate of 7.1 percent. Local tax revenues were well beyond expectation in this period. Municipal authorities expect tax proceeds to reach 7.3 billion euro over 2005.
Total estimated and received municipal tax proceeds
Property tax and building permit fees largest extra proceeds
In 2003 municipal tax proceeds increased by more than 200 million euro, i.e. 3 percent more than was estimated. Over half of extra proceeds come from property tax (56 million euro) and building permit fees (53 million euro).
Parking fees, waste collection rates and sewerage charges together added another 73 million euro to the budget. Cautious budgetary assumptions largely account for the extra tax proceeds. Revenues from building permit fees made a significant contribution, mainly because more plans for the construction of new houses have been accepted than earlier anticipated.
Extra proceeds municipal taxes by source
Financial compensation households over 0.4 billion euro
Tax relief measures for households amounted to 420 million euro. The Zalmsnip (a reduction on local taxes for households) amounted to 300 million euro and tax exemption claims granted for nearly 120 million euro. Since the year 2000, tax exemption claims granted have increased annually by nearly 11 percent, whereas the Zalmsnip tax reduction was fairly stable throughout this period.
Tax burden reduction
Property tax, waste collection rate and sewerage charges
In 2003 municipal tax proceeds amounted to 6.3 billion euro, after deduction of tax burden relief measures for households. Property tax, waste collection tax and sewerage charges accounted for almost 80 percent of total tax proceeds. Parking fees and building permit fees also played an important part, accounting for 12 percent of total tax proceeds.
Municipal tax proceeds by source, 2003
In future the municipal tax system will be restructured. On 1 January 2005 the Zalmsnip tax reduction was abolished and the government intends to abolish part of the property tax on 1 January 2006. Municipalities will receive compensation from the Municipal Budget Fund during a period of two years. As from 2008 the government has projected to introduce a new type of municipal tax to replace the current property tax.