As you know, I have been actively working as a member of the Revenue and Taxation Committee to come up with solutions to our property tax problem in the Valley and the State of Utah. The time is now for definite action if we want to make any changes in the existing tax system in the next legislative session. I would ask each of you to review the issue as presented below and get back to me before mid October with your ideas and suggestions.
The Problem As I View It!
Predictability is the foundation of a fair and soundly administered tax system. Most importantly, a predictable tax system ensures tax certainty for taxpayers. "Tax certainty" means that taxpayers can, year after year, consistently expect a predictable tax bill.
No one likes an unpleasant surprise when it comes to paying taxes. Taxpayers want to be certain as to what their tax liability will be and when the taxes are due. Tax certainty improves both taxpayer compliance and support for the tax system. Taxpayers lose confidence in the tax system, and view it as arbitrary and unfair, if it cannot provide a predictable and stable tax obligation.
Tax certainty is especially critical under the property tax. The property tax is the only tax where the government determines the tax to be paid and then sends a bill to collect the tax that is due -- months after the assessment. Unlike sales or income taxes where tax choices are largely in the hands of the taxpayer, a taxpayer's property tax liability is determined and controlled, in large measure, by the government.
Utah's current property tax system, based on fair market value (FMV), does not ensure tax certainty for taxpayers. Difficulties in accurately determining fair market value on a mass basis, volatile housing prices, shifting tax burdens, and tax rate increases, have led to dramatic increases in property taxes for many Utah taxpayers.
Improving Taxpayer Certainty for Property Taxpayers
Improving taxpayer certainty will help restore taxpayer confidence in the property tax system. Under my proposal, property taxpayers can be certain that their annual property tax liability will nearly always be within certain bounds.
Highlights of the plan include (click here to view):
Issues for Discussion and Comment
1. Should this plan apply to residential property only? (Owner occupied and/or rental?) Or all locally assessed property? (No change is contemplated for personal property or centrally-assessed property.)
2. Should this plan require a dynasty provision? How are property transfers between spouses treated? Between generations?
3. Should this plan allow a transferring of the "fixed basis" from one house to another? Within counties? Between
counties? How many times? Age limit?
4. How to handle drop-in housing prices? Drop below either base year level or acquisition value?
5. Is the "growth factor" set statewide or will it vary by region?
6. How to handle new construction on raw land when no sale occurs. How is the tax basis determined? Cost basis?
I look forward to your comments and suggestions and I can ensure you that by working together, we can make a difference in our County and State.
Comments should be sent to Gage Froerer prior to October 15th.
Gage Froerer
District 8 State House of Representatives.
801-391-4233
gfroerer@utah.gov
