Journal of Tax Reform
Individual property tax to fund public transport
E.V. Leontev, Yu.V. Leontyeva
Ural Federal University named after the first President of Russia B.N. Yeltsin, Ekaterinburg, Russian Federation
Abstract
Efficient and reliable public transport is of prime concern to city dwellers. To function efficiently, public transport generally needs subsidies from the state or local government. Our goal was to design and develop an alternative model of property tax that would provide financing for public transport. It was hypothesised that if the market value of real estate depends on the proximity of public transport, property tax can be a reliable source of financing for public transport. Based on the hedonic pricing theory, we used multiple regression to measure the impact of public transport proximity on the value of residential property. The data on the market value of property and property tax was taken from statistical tax reporting forms of the Federal Tax Service. The data on various public transport infrastructure facilities was used from the specialized open registers. We tested our alternative model of property tax, using the case of the Ekaterinburg Metro and the Tram and Trolleybus Company, through regression analysis of 7,685 objects of residential property in the City of Ekaterinburg. It was found that the efficiency of the underground service is higher than that of the city’s tram network. On the average, the proximity of underground stations increases the value of housing by over 6%. As predictive estimation of the amount of tax determined by the proximity of public transport showed, the alternative model of property tax is sufficient to cover capital expenditures of the city’s public transport operators and could, therefore, contribute to further expansion and modernization of the transport network.
Keywords
property tax model, public transport, property tax, property value, metro, tram
JEL classification
Н23; R42References
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About Authors
Evgenii V. Leontev – Postgraduate of the Department of Financial and Tax Management, Ural Federal University named after the first President of Russia B.N. Yeltsin, Ekaterinburg, Russia (620002, Ekaterinburg, Mira St., 19); ORCID: 0000-0002-7531-8078; e-mail: Pasparto@yandex.ru
Yulia V. Leontyeva – Associate Professor of the Department of Financial and Tax Management, Ural Federal University named after the first President of Russia B.N. Yeltsin, Ekaterinburg, Russia (620002, Ekaterinburg, Mira St., 19); ORCID: 0000-0003-4676-9926; e-mail: uv.leonteva@mail.ru
For citation
Leontev E.V., Leontyeva Yu.V. Individual property tax to fund public transport. Journal of Tax Reform. 2021;7(1):6–19. DOI: 10.15826/jtr.2021.7.1.087
Article info
Received January 10, 2021; Revised March 14, 2021; Accepted April 9, 2021
DOI: http://dx.doi.org/10.15826/jtr.2021.7.1.087
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