Research on Property Tax System

Client

Deloitte

Country

Georgia

Origin Of Funding

USAID Economic Governance Program

Start Date

15.07.2022

End Date

20.01.2023

Region

Caucasus

The project aims to evaluate the issues affecting the tax base and to assess different options for the coverage of property tax while analyzing the existing exemptions and providing recommendations for adjustments. 

The research will identify the challenges with respect to property taxation and administration, including its presumptive nature in the current framework, the most feasible way of taxing under-used property, and different approaches to defining and assessing the tax base and taxable property values. In this regard, the research will overview different approaches to updating property values and the tax base, which arguably represents the most difficult issue in an administrative, economic, and political sense. 

“A strong property tax system can have a long-term positive effect on an economy and its productivity. That type of tax is generally perceived as the most efficient and the least detrimental to economic growth since such taxation does not negatively affect firms’ and households’ decisions to save and invest,”

said Ekaterine Mikabadze, team leader for the project.

“It should also be noted that property tax provides one of the few potential sources of taxation for local governments and, therefore, it can have a positive impact on the fiscal independence of the municipalities. To support the improvement of the property tax system in Georgia, our team will thoroughly analyze it, study international best practices and provide recommendations for adjustment,”

said Mikabadze.

To achieve the abovementioned goals, the project team will conduct a preliminary assessment of needs, gaps, policy context, and opportunities, performed through preliminary consultations with the Ministry of Finance (MoF), Revenue Service, and USAID Economic Governance Program.

The team will also conduct stakeholder consultations, evaluate the existing tax policy regime regarding property tax, and identify property taxation and administration challenges. It will explore international experiences regarding property taxation and the possibility of modernizing the current property taxation framework in Georgia, as well as conduct an impact evaluation of the advantages and disadvantages of different options.

The project team will develop recommendations based on international experience and analysis previously conducted, while considering country-specific economic development priorities, taxation characteristics, structural and tax administration factors, and other developmental policies.