Challenging the conventional practice : the use of value banding in the assessment of residential properties for a recurrent property tax

Abstract

Countries and jurisdictions that have a value-based recurrent property tax typically estimate an individual taxable value for each property. In contrast to discrete values there is the alternative of value banding. Internationally, it is an approach that is not widely used with only two countries having adopted this valuation basis for the recurrent property tax on residential property (namely Great Britain with the Council Tax and in Ireland with the Local Property Tax (LPT)). The paper examines the underlying reasons as to why banding rather than discrete values was implemented in both jurisdictions. Interestingly, both jurisdictions have designed quite different banding structures, different approaches to the tax assessment and a different strategy to the valuation issue. The Council Tax was introduced some 33 years ago with only minimal or no changes made to the design of the tax across the three jurisdictions. The paper highlights the main criticisms that have been levied against the Council Tax since its introduction and the steps being taken to address them. The level of criticism to the banded LPT in Ireland has been much more subdued and in this regard the paper identifies several key policies that were critical to the successful implementation of the Local Property Tax.