Real estate tax rates in the tax policy of municipalities in Poland and the spatial differentiation of its effects

Abstract

Pursuing tax policy, municipalities are authorized to model tax rates imposed on various types of real estate. As a result, they lose part of their tax revenues. The tendency to reduce rates varies both in terms of the type of tax and the type of municipality. The most significant losses are recorded in real estate tax and the highest deprivation of revenues is affected by urban municipalities. Reduction of tax rate in agricultural tax is more significant in rural municipalities compare to other types of municipalities but it does not influence badly on revenues collected from this tax. Hardly any unit decides to reduce forest tax. Cities with poviat rights usually conduct active tax policy but they are oriented on maximizing tax revenues. According to that the reduction of tax rates in these units is moderate. Percentage of lost revenues caused by reducing tax rates by municipal council in total revenues of real estate tax, agricultural tax and forest tax decreased in years 2014–2023.

There are spatial dependencies between neighbouring municipalities – the amount of lost revenue from taxes levied on real estate per capita is similar. Areas of concentration of high losses in municipal income per capita are clearly marked, as are areas where these losses are low or non-existent. The smallest differentiation, and thus the greatest similarity between units, occurs in the case of forest tax. The largest differences are revealed in the property tax. Neighboring municipalities try not to stand out negatively by using higher tax rates so as not to discourage voters.