Comparative analysis of holding tax assessment methods

Abstract

Holding tax has been the focus of revenue reforms in most urban local bodies as it is one of the significant sources of revenue. But the potential of this source is seriously under utilized due to weakness in both assessment and administrative process. The traditional holding tax assessment system lacked transparency and objectivity. There are many reasons for it. One of the reasons often cited is existing assessment system is too complex and often subjective. There is a great scope for urban local government bodies to enhance their own revenue collection by making proper assessment of holding taxes. Although several studies are conducted on local municipal tax in Bangladesh, but no extended study has so far been conducted considering comparative analysis of holding tax assessment method. This research work has focused on comparing three methods namely Annual Rental Value, Capital value system and Unit Area Method for assessing holding tax. For assessment purposes 6 no. ward of Joypurhat Pourashava has been taken as a case study. About 452 holdings were considered for assessment under the three methods. These three methods have their own factors for assessing tax. However for simplicity as well as for practical convenience only common factors were considered. The common factors for all these assessment methods are: location factor, structure factor, occupancy factor, age factor and plinth area. The assessment result showed that tax from holding is more in unit area method than capital value system and annual rental value method. It has also found in the study area that political influence is also important factor for irregular holding tax assessment and poor collection. The existing system is not transparent. Depending on the comparative advantage and tax evaluation the research used six criteria to compare the suitability of the method. Most suitable method has been identified from the suitability analysis to determine the holding tax in the urban areas of Bangladesh. It is hoped that the new assessment method will reduce the problems of under assessment and corruption.