More than three million people have already lodged objections to their assessments of the new property tax, according to a survey. As a result, the state could lose high revenues.
A survey of the 16 state finance ministries by the “Handelsblatt” has shown that more than three million taxpayers have so far lodged objections to their property tax assessments. According to the tax union, the number of unreported cases is likely to be even higher.
According to the newspaper report, in order to be able to process this flood of objections, some federal states have withdrawn tax officials from important tasks – including auditors who normally check companies’ tax returns. Florian Köbler, Federal Chairman of the German Tax Union, DSTG, complained that the employees would have been deployed more sensibly elsewhere.
“Capacities used pointlessly”
On average, a tax auditor brings in one million euros in additional taxes for the state, Köbler calculates. The money would be missing from the state coffers if the experts could not take care of their actual task – to follow up possibly inadequate tax returns from restaurants or companies. “The testing capacities are being used completely pointlessly,” Kobler said tagesschau.de.
According to the chairman of the trade union for financial management, this not only reduces state revenue, but also has a negative impact on tax justice and fair market conditions; if, for example, a company cannot be taxed correctly due to a lack of inspectors.
Number of appeals higher than expected
The number of objections is likely to be far higher, estimates tax unionist Köbler. “There are laundry baskets of objections in the tax offices, some of which have not yet been recorded.” The German tax union had expected a rate of five to ten percent of lawsuits, currently it is assumed to be 15 to 20 percent. According to Köbler, this was the result of feedback from the tax authorities.
federal model unconstitutional?
The reason for the high number of objections is likely to be the model lawsuit on property tax, which is the result of a legal opinion by the Taxpayers’ Association and the Haus und Grund owners’ association. According to the legal opinion, the new Federal Property Tax Act is unconstitutional. It is about the federal model for calculating property tax, which is used by eleven federal states.
The taxpayers’ association considers individual parameters of the calculation to be questionable. The so-called standard land value, which is determined in a certain zone on the basis of sales prices over the last few months, decides on the value of a plot of land. “If, for example, a fillet piece in the city center is sold to an investor at a high price, that drives up prices in the entire area,” says Daniela Karbe-Gessler, head of the tax law and tax policy department at the Taxpayers’ Association.
The owner also does not have the opportunity to present counter-evidence. From the point of view of the taxpayers’ association, the assessment basis for the property tax is also non-transparent and incomprehensible. The Federal Constitutional Court must now rule on these and other points of criticism. According to tax expert Karbe-Gessler, the current draft law may result in comparable properties being subject to different property taxes, even though their location or development is comparable, for example.
Five federal states are going their own way
The five federal states of Bavaria, Baden-Württemberg, Hamburg, Hesse and Lower Saxony each have their own procedures for assessing property tax. Jochen Kilp from the Hessian Taxpayers’ Association criticizes the federal model as too complicated and in parts incomprehensible. The Hessian model, on the other hand, is very simple, only the living space is used.
Tax expert Kilb admits that this also harbors injustices: “The square meters on which a barn in the Vogelsberg district stands are valued in exactly the same way as a penthouse apartment in Frankfurt.” But there is no automatic increase in value just because the purchase value of a property in the neighborhood increases.
Patience is required
In addition, the municipality ultimately has the opportunity to influence the actual property tax amount – through the so-called assessment rate. This factor is determined by a city or a municipality. It is used to determine the actual amount of a tax liability.
However, according to Kilp, the tax rate is only set by a municipality once all the notifications have been received. Therefore patience is required. At present, many citizens would have already received the notice for the property tax, but these are not yet payment requests, but the basis for the determination of the property tax by the city or municipality. The tax rate determines the actual amount of the tax.
The expert assumes that the municipalities pay attention to the so-called revenue neutrality, at least that is what the legislature intends. According to this, the total revenue of the state would remain unchanged despite the new property tax calculation. However, the tax rate can change on an individual basis.
The threat of a lawsuit was in the room early on
Jochen Kilp therefore advises against further objections. And Daniela Karbe-Gessler from the German Taxpayers’ Association believes that the flood of objections could have been prevented – for example, if the tax offices had issued preliminary assessments. Then, according to Karbe-Gessler, no objection would have been necessary.
The taxpayers’ association had also suggested this, but the tax authorities had not responded to it. The taxpayers’ association had already made it clear during the ongoing legislative process that it wanted to take legal action against the federal model.