A transition to computing the property tax of natural persons on the basis of the cadastral value of taxable items: its merits and demerits for municipal budgets

The paper deals with the novel ideas of the Russian tax law. Due to the adoption of the Federal Law No. 284-ФЗ as of October 04, 2014, the property tax of natural persons is charged on the basis of the cadastral value of taxable items. At the same time, the decision on the transition to this approach is made by laws of the constituent entities of the Russian Federation up to January 01, 2020. The analysis of various regional and federal laws and regulations and the statistics available makes it possible to assess the merits and demerits of the new tax method and its relationship with budget set-ups of the municipalities. The advantages include an increase in local budgets and the introduction of additional facilities brought into operation since 2013 to the tax system. However, many households are exempt from taxes because of tax deduction in rural areas that may lead to a decrease in municipal budgets. The tax base is reduced in relation to a number of items. Besides, the cadastral value can be challenged. Prospects for computing the property tax of natural persons on the basis of the cadastral value of an item seem to be ambiguous.