Industrial zone real estate taxes could rise in Czech towns

The Czech Finance Ministry has proposed giving towns the right to increase the level of real estate tax paid by the owners of industrial parks. Currently, there's no way for mayors to do this without raising taxes for their residents at the same time. Czech Television interviewed the mayor of Kostelec near Pilsen, which raised real estate taxes 150 percent in order to bring in an extra CZK 1m in revenues. The money is desperately needed in order to build a road for trucks heading to and from Southern Bohemia.

But the bigger problem lies in the amount of funds towns get to keep for their own development. A study carried out by KPMG in cooperation with Panattoni revealed that German towns get to keep 100 times more of the real estate tax paid for industrial land than Czech towns. According to the KPMG example, the Czech state would collect CZK 3bn in real estate taxes for an average industrial zone over 30 years and allocate CZK 15m to the municipality. In Germany, the same project would produce CZK 3.5bn in taxes, but the town would keep CZK 1.6bn of it.
"Mayors and city assemblies don't have any way to compensate their own residents for further development," Pavel Sovička told Czech Television. But the Ministry of Finance either doesn't trust the ability of towns to manage money effectively, or it simply doesn't want to lose the power of the purse.