Table of Contents
This article on revenue systems gives the sides of every budget. It starts with the historical background of the revenue systems, the trend that is current in the budgets, all about property tax and the controversies that have been experienced in these situations, taxation process and assessments and the revenue sources. The article is excellent in explaining the revenue side as it is used by inters governments. The explanation is mainly based on the growth of these governments and the current patterns that have been observed in government revenue. From the article, the most important local tax is the property tax despite the controversies that it has been holding. The article is successful in explaining property tax, the controversies that it has and how the tax are administered. This is also done to the sales and income taxes.
Type of operational budget
The operational budget that is addressed in the article is the revenue systems. The article addresses intergovernmental revenue which is the money obtained from the other governments and they can be categorized into shared taxes, grants, advances and loans. The financial arrangements that are done through these are complex and they are used to reflect the organization, the structure, roles and the responsibilities of the government (Mieszkowski, 2012). In the article, there is explanation on the trend that the revenues have been deployed by the government. The methods that have been used in this situation include reduced federal aid, revolt of the taxpayers and also recessionary pressures without the federal bailout (Oates, 2009). These have been used to show the reason behind the fiscal federalism.
Property tax has been used by the government to ensure that there is generation of the needed revenue. Through the system, the government is able to assess the local property to determine its value in the jurisdiction of the government. The next step is that there is determination of the tax rate and then the rate is applied to each of the properties. The taxation methods have remained the most effective revenue source for most of the local governments and states.
Challenges faced by the leaders
The leaders that have applied the method have had a major challenge of not determining the taxes that should be wealth. In the current situation, the wealth that people have is not reflected in real property and this has made the method ineffective in revenue collection in all sectors (Oates, 2009). The method hence cannot be used to tax wealth progressively and uniformly. The importance of property tax as a revenue generator has reduced since it has not been able to provide enough revenue through itself (Mieszkowski, 2012). To all the properties that the tax is imposed are taxed uniformly. In some of the cases, the tax is regressive but the government is able to add some features to be so that there is reduction of the regression burden. This has made property tax less significant but it is still applied in most governments as a revenue generator.
The other challenge that the government has experienced in using the method is that a person can be held responsible both in real property and personal property. A citizen may also be living in overlapping governments and thus the taxpayer may be forced to pay the local tax on the same property twice to two different jurisdictions (Netzer, 2006). Double taxation has become a main problem in the local government revenues. The revenue collection method discourages homeownership and it provides preferential for shelter cost. Most of them have found paying property taxes painful to pay. They feel that there are those that are not equally taxed.
Tackling the financial budget issue
There are several methods that can be used to ensure that the property tax is better. Some of the reforms that can be put into place include having the right assessors who uses better assessment techniques (Netzer, 2006). When there is better pay for the team, more qualified people may be attracted. The government also has the role of ensuring that the assessors have better training. These assessors should be selected on the basis of professional merit and not consider the local elections. The other important method is through government reorganization. The assessment districts can be consolidated by the government since the reform lead to economies of scale. Through the reform, specialization is increased. There is also better job development for the assessors and the complex equipment used can lead to better results. There are other methods that can be used by the government such as forming a tax act.
- Mieszkowski, P. (2012). The property tax: An excise tax or a profits tax?. Journal of Public Economics, 1(1), 73-96.
- Netzer, D. (2006). Economics of the property tax. Economics of the property tax.
- Oates, W. E. (2009). The effects of property taxes and local public spending on property values: An empirical study of tax capitalization and the Tiebout hypothesis. Journal of political economy, 77(6), 957-971.