Major Tax Structure: Quantifying Property Tax for Housing for Humanity Houses in a Municipality

Presented By,

(Your name)

(The instructor’s name)

(The course title)

(Date)

Major Tax Structure

Quantifying Property Tax

In order to compute the property tax liability for a property owner within a given municipality, a number of factors are considered. The first step in determining the percentage of a tax element paid by an individual entity with regard to total property tax for a given municipality is to get the working figure for the total tax revenues for the entire municipality and identify the property tax obligation of the entity under consideration. In determining the working figure, calculations can be based on historic revenues for a past income period for the tax authority or projections for an anticipated income period may also be applied. Alternatively, a particular class of property tax may be considered for every tax units that the entity under consideration may be having across the entire municipality. Consideration of property tax classes will be important due to the fact that there may be different properties in different localities which imply that they will be subjected to different taxation regulations (Abhijit, 1992). Factoring in heterogeneous tax liability aspects of an individual property owner is important in the quantification of the property tax since tax regimes are usually diversified for a number of reasons such as nature of properties and the locality factors.

For the case study of determining the percentage of tax element for a municipality due from Habitat for Humanity houses, I would first identify the municipality, types and the number of houses owned within the municipality. It will also involve valuation of the other tax allowances as well as other tax related charges for the respective properties applicable within the municipality that have an impact on Habitat for Humanity houses tax obligations. Municipal rates will be applied during the computation of the actual tax obligation owed by Habitat for Humanity with respect to the various houses owned. Final percentage property tax computation for the Habitat for Humanity with respect to the entire municipal property tax revenues will be performed after consideration of the applicable property tax rates, allowable deductions as well as other charges on each of the houses owned by Habitat for Humanity within the municipality. This procedure will be conducted based on the updated assessment of the actual housing units owned for anticipated incomes, in case there are disposals from the previous ownership. In addition, projections will be dependent on the currency of applicable rates in case there are adjustments from the tax authority in the municipality (Peppit, 2009).

There are a number of difficulties expected to be encountered in the actual computation of property tax obligation on a particular entity for consideration in the computation of percentage tax for the entire municipality. One of these challenges will touch on the overall tax obligation for all the houses owned by the Habitat for Human. Various house classes and their allowable deductions as well as charges will be used to determine the actual tax liability for comparison with the total municipal property tax revenue (Cordes, Ebe and Gravelle, 2005).. In light of the computation of all houses owned by Habitat for Human, it will be a complicated procedure to ascertain the actual position of the tax obligation under the regulations’ circumstances. The collection of individual tax obligations for every house owned would require a lot of resources to be deployed in order to ensure that the available information is accurate and updated. In case there is information available for the same computations, reliance on the data will require an assessment to ascertain their accuracy and validity.

There is another concern in terms of collection of data to constitute the overall property tax value for the entire municipality for computation of the relevant percentage. While it is necessary to have the total tax value for the entire municipality, it would appear an enormous task to compute the tax obligation on all the houses or properties in the municipality merely for the Habitat for Humanity houses. It would therefore increase the need to rely on available information on the same raising reliance issues on the credibility of the data.

Advantages of Property Tax Break

Tax breaks and allowances for special types of properties are made available to the property owners as facilitated by tax regulations. It is important for the tax authority to extend preferential treatment to different entities based on their operations in order to act as an incentive or a deterrent regarding the regulation under consideration. In light of the operations of the Housing for Humanity organization, tax breaks would firstly be extended to exempt it of certain tax burden in order to facilitate certain positive impacts in the housing sector by the authorities. It is therefore an advantage on the part of the organization since the waivered tax element is directed to other housing projects and reduces operation costs when compared with other entities.

Secondly, tax breaks acts as a development catalyst for the municipality since the incentive element will attract more investments in the housing industry. Through provision of preferential treatments in tax breaks to organizations such Housing for Humanity, the residents are guaranteed housing services as an integral social service provision agenda. By ensuring such benefits to roll back to the residents, it is possible to spur economic growth in the municipality.

Disadvantages of Property Tax Break

Discriminating against tax entities may be negatively perceived among the taxpayers since every taxpayer would want an equitable treatment before the law (Peppit, 2009). It is possible to derive disadvantageous impacts of tax breaks extended to certain property owners form such a perspective in a tax jurisdiction. First, it is detrimental for the tax authorities to introduce tax breaks to certain sections of the taxable population while treating the rest differently. It may appear punitive to the category of property tax payers who do not qualify to the tax break, which may result in negative perceptions about tax obligations. Such perceptions may provoke tax evasion attempts which results in reductions in revenues.

Secondly, the breaks results in reduced revenues and the process implies that special treatments are in form of cuts on the tax element. It can be argued that by allowing the private sector to offer services at a reduced cost is a measure of how the authorities avoid their mandate to directly serve the people. Collecting the revenues and taking charge of the amenities would make the authorities to be more answerable and protected from the insensitive private sector. However, for no-profit making entities, the correct categorization of tax rates would not be questionable.

Resolving the Case Problem

In order to quantify the percentage tax owed by an entity with regard to the total tax revenues, it is important that the tax structure has mechanisms of identifying the updated tax liability for every property owner (Cordes, Ebe and Gravelle, 2005). By having a comprehensive database for the properties owned by the various property owners, it would be easy to compute the actual tax obligation for all tax payers. It is therefore an important tax structure policy to have the entire tax system based on an updated database from which the actual tax obligation can be followed. Most tax systems have their databases completely automated and integrated into a central monitoring position from where they are followed up. In a comprehensive tax system, the creation of various tax classes must be publicized in order for the tax payers to understand the mechanism of the tax system (City of Ottawa, 2011). Through such information, it will be easy for the computation of tax liability by individual tax payers on the various pieces of property that they have. Alternatively, publicizing the applicable tax rates for the various property categories will facilitate an easy computation of the tax obligation thereby raising reliability confidence.

References

Abhijit, D. (1992) “Local Government Finances: Trends, Issues and Reforms,” in Amaresh, B.. et al. (Eds.), State Finances in India, New Delhi, India: Vikas Publishing House

Carter, C. (2006) Tax breaks, they don’t want you to know about: what you don’t know will hurt you. Retrieved from: Lulu.com

City of Ottawa (2011) “Ontario’s Property Tax System,” Retrieved from: HYPERLINK “http://www.ottawa.ca/residents/proptaxes/general_info/on_tax_system_en.html” http://www.ottawa.ca/residents/proptaxes/general_info/on_tax_system_en.html

Cordes, J., Ebel, R. & Gravelle, J. (2005) Encyclopedia of taxation and tax policy. Washington DC: The Urban Institute

Peppit, M. (2009) Tax due diligence. London, UK: Spiramus Press Ltd.,

Major Tax Structure: Quantifying Property Tax for Housing for Humanity Houses in a Municipality

Presented By,

(Your name)

(The instructor’s name)

(The course title)

(Date)

Major Tax Structure

Quantifying Property Tax

In order to compute the property tax liability for a property owner within a given municipality, a number of factors are considered. The first step in determining the percentage of a tax element paid by an individual entity with regard to total property tax for a given municipality is to get the working figure for the total tax revenues for the entire municipality and identify the property tax obligation of the entity under consideration. In determining the working figure, calculations can be based on historic revenues for a past income period for the tax authority or projections for an anticipated income period may also be applied. Alternatively, a particular class of property tax may be considered for every tax units that the entity under consideration may be having across the entire municipality. Consideration of property tax classes will be important due to the fact that there may be different properties in different localities which imply that they will be subjected to different taxation regulations (Abhijit, 1992). Factoring in heterogeneous tax liability aspects of an individual property owner is important in the quantification of the property tax since tax regimes are usually diversified for a number of reasons such as nature of properties and the locality factors.

For the case study of determining the percentage of tax element for a municipality due from Habitat for Humanity houses, I would first identify the municipality, types and the number of houses owned within the municipality. It will also involve valuation of the other tax allowances as well as other tax related charges for the respective properties applicable within the municipality that have an impact on Habitat for Humanity houses tax obligations. Municipal rates will be applied during the computation of the actual tax obligation owed by Habitat for Humanity with respect to the various houses owned. Final percentage property tax computation for the Habitat for Humanity with respect to the entire municipal property tax revenues will be performed after consideration of the applicable property tax rates, allowable deductions as well as other charges on each of the houses owned by Habitat for Humanity within the municipality. This procedure will be conducted based on the updated assessment of the actual housing units owned for anticipated incomes, in case there are disposals from the previous ownership. In addition, projections will be dependent on the currency of applicable rates in case there are adjustments from the tax authority in the municipality (Peppit, 2009).

There are a number of difficulties expected to be encountered in the actual computation of property tax obligation on a particular entity for consideration in the computation of percentage tax for the entire municipality. One of these challenges will touch on the overall tax obligation for all the houses owned by the Habitat for Human. Various house classes and their allowable deductions as well as charges will be used to determine the actual tax liability for comparison with the total municipal property tax revenue (Cordes, Ebe and Gravelle, 2005).. In light of the computation of all houses owned by Habitat for Human, it will be a complicated procedure to ascertain the actual position of the tax obligation under the regulations’ circumstances. The collection of individual tax obligations for every house owned would require a lot of resources to be deployed in order to ensure that the available information is accurate and updated. In case there is information available for the same computations, reliance on the data will require an assessment to ascertain their accuracy and validity.

There is another concern in terms of collection of data to constitute the overall property tax value for the entire municipality for computation of the relevant percentage. While it is necessary to have the total tax value for the entire municipality, it would appear an enormous task to compute the tax obligation on all the houses or properties in the municipality merely for the Habitat for Humanity houses. It would therefore increase the need to rely on available information on the same raising reliance issues on the credibility of the data.

Advantages of Property Tax Break

Tax breaks and allowances for special types of properties are made available to the property owners as facilitated by tax regulations. It is important for the tax authority to extend preferential treatment to different entities based on their operations in order to act as an incentive or a deterrent regarding the regulation under consideration. In light of the operations of the Housing for Humanity organization, tax breaks would firstly be extended to exempt it of certain tax burden in order to facilitate certain positive impacts in the housing sector by the authorities. It is therefore an advantage on the part of the organization since the waivered tax element is directed to other housing projects and reduces operation costs when compared with other entities.

Secondly, tax breaks acts as a development catalyst for the municipality since the incentive element will attract more investments in the housing industry. Through provision of preferential treatments in tax breaks to organizations such Housing for Humanity, the residents are guaranteed housing services as an integral social service provision agenda. By ensuring such benefits to roll back to the residents, it is possible to spur economic growth in the municipality.

Disadvantages of Property Tax Break

Discriminating against tax entities may be negatively perceived among the taxpayers since every taxpayer would want an equitable treatment before the law (Peppit, 2009). It is possible to derive disadvantageous impacts of tax breaks extended to certain property owners form such a perspective in a tax jurisdiction. First, it is detrimental for the tax authorities to introduce tax breaks to certain sections of the taxable population while treating the rest differently. It may appear punitive to the category of property tax payers who do not qualify to the tax break, which may result in negative perceptions about tax obligations. Such perceptions may provoke tax evasion attempts which results in reductions in revenues.

Secondly, the breaks results in reduced revenues and the process implies that special treatments are in form of cuts on the tax element. It can be argued that by allowing the private sector to offer services at a reduced cost is a measure of how the authorities avoid their mandate to directly serve the people. Collecting the revenues and taking charge of the amenities would make the authorities to be more answerable and protected from the insensitive private sector. However, for no-profit making entities, the correct categorization of tax rates would not be questionable.

Resolving the Case Problem

In order to quantify the percentage tax owed by an entity with regard to the total tax revenues, it is important that the tax structure has mechanisms of identifying the updated tax liability for every property owner (Cordes, Ebe and Gravelle, 2005). By having a comprehensive database for the properties owned by the various property owners, it would be easy to compute the actual tax obligation for all tax payers. It is therefore an important tax structure policy to have the entire tax system based on an updated database from which the actual tax obligation can be followed. Most tax systems have their databases completely automated and integrated into a central monitoring position from where they are followed up. In a comprehensive tax system, the creation of various tax classes must be publicized in order for the tax payers to understand the mechanism of the tax system (City of Ottawa, 2011). Through such information, it will be easy for the computation of tax liability by individual tax payers on the various pieces of property that they have. Alternatively, publicizing the applicable tax rates for the various property categories will facilitate an easy computation of the tax obligation thereby raising reliability confidence.

References

Abhijit, D. (1992) “Local Government Finances: Trends, Issues and Reforms,” in Amaresh, B.. et al. (Eds.), State Finances in India, New Delhi, India: Vikas Publishing House

Carter, C. (2006) Tax breaks, they don’t want you to know about: what you don’t know will hurt you. Retrieved from: Lulu.com

City of Ottawa (2011) “Ontario’s Property Tax System,” Retrieved from: HYPERLINK “http://www.ottawa.ca/residents/proptaxes/general_info/on_tax_system_en.html” http://www.ottawa.ca/residents/proptaxes/general_info/on_tax_system_en.html

Cordes, J., Ebel, R. & Gravelle, J. (2005) Encyclopedia of taxation and tax policy. Washington DC: The Urban Institute

Peppit, M. (2009) Tax due diligence. London, UK: Spiramus Press Ltd.,