Municipal charges on communal waste: do they compete with the immovable property tax?

Abstract

Purpose The purpose of this paper is to give a recommendation to the municipalities what local tax/taxes sensu largo (a waste charge or an immovable property tax increased by a local coefficient) are to be collected to achieve expected and necessary incomes and limit the administrative costs. Design/methodology/approach To reach the aim, it was necessary to analyze the number of municipalities increasing the property tax by the local coefficient and abolishing the charge on communal waste to save money for the waste charges administration. The evidence of municipalities applying the local coefficient was used as a basis for the research. To get the information on charges on communal waste collected in these municipalities with the local coefficient within the past at least five taxable periods, the information from Monitor was used. If there was any such a significant change, then it was necessary to use the bylaws and to do thorough analysis of the reasons. Findings The hypothesis that a high number of municipalities in the Czech Republic are replacing the charge on communal waste with the local coefficient applicable for the immovable property tax was rejected. In the opinion of the author, the ideal approach is to have just one local tax – immovable property tax. This tax is administered by the state tax office and the revenue should cover the cost of waste management. Adopting only the property tax increased by the local coefficient, it is necessary to explain the benefits to the taxpayers, that is, locals and voters. Originality/value The research on the given topic was never done in the Czech Republic, as there is no evidence of local charges collected in individual municipalities.

Utilization of a Local Coefficient for Immovable Property Tax in the Czech Republic

“…At the same time, an increase in immovable property tax will bring more income than the local tax in most cases. According to Radvan (2019), it is ideal for a municipality to have only one local tax -immovable property tax, precisely because of the zero costs of its administration on the part of the municipality and the ability to cover the costs of waste management if a local coefficient is introduced. If the municipality does not want or cannot compensate the citizens for the higher tax in any way, it is important that it communicates and informs the citizens about this issue.…”

New Charges on Communal Waste in the Czech Republic

“…The constitutional principle is that taxes (sensu largo, including charges) can be imposed only by acts, not merely by the local bylaw. In the Czech Republic, the principle nullum tributum sine lege is included in the Charter of Fundamental Rights and Freedoms (Article 11/5), which is part of the Czech Constitution sensu largo, together with the constitution sensu stricto (Radvan 2016, Radvan 2019.…”

“…Typically, in the case of a recurrent property tax, the municipality has several options to increase the basic tax rate and the tax itself (even five times more than the legal regulation sets). Several municipalities do not collect charges on communal waste, and their waste management is financed by increased property tax (Radvan 2019). Although there are no statistical data, the situation is likely the same with the new regulation effective from the beginning of 2022: most municipalities are employing a charge for the municipal waste management system, and far fewer have chosen to charge for the disposal of municipal waste from immovable property, as this is a more complicated system (see below).…”

“…However, this exemption is set only in the legal regulation concerning the charge for the disposal of municipal waste from immovable property. In all other cases, it is up to the municipality to set an exemption in the ordinance (Radvan 2019).…”

“…Sanctions set in the Tax Code cannot be used. For failure to pay the levy on the basis of a contract, sanctions should have been set in the contract, and the general rules stated in the Civil Code 9 should have been applied. Generally, it is better to have other specific tax administration procedures for local charges, including charges on communal waste.…”