In Australia property tax is known as property or land rates. The frequency of payment is determined by local councils who use land valuers to determine land worth. The land value does not include value of any buildings that may be erected on the land or any other improvements that are made to the land. Quarterly payments of land rates are common across Australian councils.  Land owners are also expected to pay water rates in addition to land rates.

In Canada property tax is linked with land use. The current use of the property plus the value of the land will be considered for the purposes of taxation. The tax is levied by muncipal governments and the valuation criteria is laid down by provincial legislation.  Normally market value is adopted for valuation purposes in most provinces. However, there may reevaluation cycles for refixing the value over a period of time.

In Hong Kong property tax is not an ad valorem tax. It is a kind of income tax.  Property owners who receive rentals are said to have received a “consideration” and hence the property is subject to tax for the year of assessment. The net assessable value of the property is computed at 80% of its assessable value multiplied by the property tax at a standard rate less any bad debts and rates paid by owner.

In India property tax resembles the US wealth tax. The property tax is a tax on buildings along with appurtenant land. The power to tax vests with the State Government and is implemented by the local authorities within whose jurisdiction the property exists. The tax base is an annual rateable value or area based rating. Owner occupied properties are assessed differently from rented properties. Commercial properties have yet another rate. Vacant land is exempt from tax and government properties are not taxable.  A number of related taxes are also imposed such as water tax, service tax, drainage tax, conservancy tax, lighting tax using the same tax base.  The rate structure is rather flat in rural areas and mildly progressive in urban areas.  Personal property in India is taxed under the Wealth tax act and is a central government levy on personal property.

In UK there is currently no ad valorem tax on property as on date.

Property tax in the USA is levied by the local government at the municipal or county level.  Assessment consists of two components–the improvements to land and the land itself.  A few states also tax personal property.

The assessment of property for tax levy in the USA is done by a tax assessor.  The appraiser takes into consideration the selling price of similar properties in the area or the income derived from the property or replacement cost of the property to arrive at the value of the property.  Assessment may be at 100% of the value or at a lesser rate taking into consideration other relevant factors.  Tax is then collected as a percentage of the value.

Additionally some states may impose a non ad valorem tax on property that is known as special assessments. Street lighting and storm sewer control facilities may be taxed under a fixed rate from property owners regardless of the value of the property they own in the area.

Personal property tax in the USA is a tax on the value of movable property owned by the individual. These include vehicles owned, durable goods such as works of art, business inventory and intangible assets such as stocks and bonds.  This tax can be imposed theoretically by any level of the Government but is practically imposed by the States.

Levy of property tax is often regarded as a regressive step by taxation gurus. It is believed that incorrect implementation of property tax can lead to a huge burden on property owners who have accumulated property but yield from property is low.  Others argue that property tax is a progressive levy because most property round the world is owned by corporations and not individuals.  However, it is to be acknowledged that the progressive or regressive nature of the tax will be determined by the prevailing environment of property ownership within the country and the play of market forces within a given locality.

The sad truth is that those who save money and husband it in fixed deposits get nothing for their pains. The small interest that is derived from the deposit is sliced through by taxes and the balance is swallowed up by inflation.  The money in the deposit does not grow and everyone knows that the value of capital deprecites with rising costs.  Net, Net–savers are losers. or it appears. Savers are the ones that are severely punished for their pains.

The problem arises from their perception about money. “Saving is good. Debt is bad.” So, they struggle to save money and pay of their debts. They do not think that they can use borrowed money to generate money.  They borrow money to pay off a liability. They insist that they are wise.  Do you agree?

I do not. Those who understand money and the velocity of money are the winners!

Let us examine this fact.  When one person puts money into the bank for the purpose of earning interest (that is eaten away by taxes and inflation), another borrows it. The person who puts in the money, loses money. The bank makes money by lending other people’s money.  Businesses make money by borrowing from other people (via the bank or getting others to invest in Public offers). In other words, those you use other people’s money to make money are the gainers. They are also rewarded for it by way of tax incentives on interest/dividend paid on borrowed capital.

It appears, that there is good debt too! If you understand the dynamics of it, you may cease to be punished for your pains! You need to decide how much more punishment you are willing to take!  Get educated. Increase your financial IQ and get going!

The concept of taxation in the modern world is really not very different.  In countries driven by socialistic principles, the common good is placed above the individual good and all land, property and incomes belong to the society/State.  Individual wealth and inheritance concepts do not exist.  In capitalistic countries where the concept individual freedom and personal good reign supreme, voluntary compliance is, seemingly encouraged and people are persuaded to consider paying taxes a duty. Penal sections of the law were enacted as disincentives to tax avoidance.

Even today, in most countries, tax laws define the boundaries of your economic freedom. You are free to earn, live and love in a community so long as you give back to the community something of what you receive from the community.  If you do not do so with the spirit of joy, voluntarily, the state has the power to act Robin Hood.  It is no wonder, therefore, that there are several voices that declare taxation a socialistic tenet in a capitalistic world!

It follows that while economies can be capitalistic or socialistic, no Government can afford to be wholly capitalistic. While they can respect the concepts of “liberty, equality and fraternity”, they cannot place the individual good over the common good without extending an invitation to anarchy.  Unbounded freedom is a myth and rightly so. Do you agree?