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. Last Updated: 07/27/2016

New Land Tax System Tested

A new system introduced in the Moscow region town of Dmitrovo for assessing tax payments for land plots and dachas is expected to be a test run to increase land tax collection all over Russia.


The joint Russian-Canadian project, launched in November, uses regular aerial surveys to screen the countryside for unauthorized construction and creates a database to assess the correct amount of tax to be paid by landowners. The monitoring detected 3,000 unauthorized buildings in the vicinity of Dmitrovo, according to a report in the daily Izvestia.


Along with tougher enforcement will come higher rates, officials said, but they did not say when or by how much.


"Tax evasion and underpayment is common even among a number of moneyed people and organizations," Lydia Dobroskok, an analyst with the Federal Land Registration Center, said in an interview Thursday, referring to the spate of "cottage" construction among New Russians.


But with tax on a typical plot standing now at only about 60,000 rubles ($10.70) a year, real estate agents said the new system is for the moment unlikely to put a damper on rural construction or sales.


"At present, the tax amounts are so small that only a drastic raise would affect the market," said Dmitry Leuvenbuk of Moscow realtors Home Sweet Home, adding that strict enforcement and higher rates would be good steps for the government to take.


Leuvenbuk said the land market in the suburbs is largely unregulated, allowing sellers to understate actual sale prices in order to dodge taxes. "There are a lot of underground transactions," he said.


The Dmitrovo project, which will serve as a pilot for the rest of the country, is being financed through a $2.5 million grant from Canada's natural resources ministry. More grants from Canada could be obtained if initial results show an improvement in tax collection, officials said.


"In most countries, land taxes contribute about 25 percent of the local budget," said Nikolai Sazonov, deputy director of the federal land center. "In Russia, it is about 1.5 percent."


Landowners as well as the local administration will benefit from the new system, Dobroskok said.


"Boosting tax collection will substantially increase local government revenues" for services such as education and sanitation, said Dobroskok, adding that dacha owners would save time as they would not have to "make the rounds of all the departments" in order to get their plots assessed.


Sazonov said under-collection of land tax is a serious problem in most regions in Russia, blaming chiefly the lack of an efficient assessment system.


The amount of taxes due is calculated on basis of the size of the plot as well the number and size of buildings on it, Sazonov said, pointing out the importance of correct measurements.


At present a dacha owner in the countryside pays 100 rubles per square meter of land per year, he said, making the annual bill for a typical 600-square-meter dacha plot come to 60,000 rubles.


Sazonov said land tax revenues in Russia, among the lowest in the world, will soon be raised to "civilized levels," starting with the Moscow region. A more gradual approach would be used for the rest of the country, he said.


He would not say by how much taxes would be raised on dacha owners.


Projects to change tax assessment systems on land have been initiated in several cities including St. Petersburg, Kirov and Novgorod, Dobroskok said, adding that 25 regions would be covered by the year 2000 if adequate financing is provided.