Property Taxation Nicaragua Fiscal Decentralisation Seminar Copenhagen 18 August 2005 Philip Bottern, consultant LGDK

Main income sources municipalities Nicaragua Business licence 2 percent of turnover Sale tax 1 percent of turnover Property tax Vehicle tax Fees on municipal services (50 percent of costs) Transfers from the centre Donations Other incomes

Property taxation Property taxation transferred from state to municipalities in percent of property’s value Calculated on a 80 percent basis of property’s value Generated very little income to state before 1992 System needed for valuation of properties System needed for payment and control Citizens needed to be informed about the existence of the property tax and their obligation to contribute

SISCAT Sistema Integral Catastral Integral cadastre system Developed from 1995 Development f Financed mainly by UNDP, DANIDA Methodology for application of system – division of municipalities into four groups – level 1 to 4 Group 1 is Auto Valuation, owners present declaration to municipality Group 4 is system with maps and graphics of all properties

SISCAT Sistema Integral Cadastral Technical staff carry out surveys on each property –Size of house, other buildings and land –What kind of material is the property made off – walls, roof, floor, doors, bathrooms, kitchen etc. –What kind of facilities are available – water, electricity, telecommunication, drain –Development of infrastructure in area – dirt road, pavement etc.

SISCAT Sistema Integral Catastral Computer program calculates value of property based of information from surveys and information on: –Tables of values of land based on property’s location (zones) –Values of materials used in property and surroundings Computer presents calculation of value and property tax of each property These valuation are presented to citizens by municipal staff and citizens are asked to pay in the municipal office

Esteli Property tax 2001-B2005 and potential (C$)

Matagalpa Property taxation 2001-B2005 and potential (C$)

Jinotega property taxation 2003-B2005 and potential (C$)

Ocotal Property taxation 2003-B2005 and potential (C$)

Sustainability Simple system Integrated in INIFOM (Municipalities’ Ministry) almost from the beginning – project located in ministry Information is integrated in municipal planning system Large number of SISCAT technicians trained Property tax is income source for municipalities with largest potential level

Major Challenges Computer System Keep information and system up-dated Back-up systems Equipment Application Political considerations at local and national level Social considerations Difficult to carry through legal claims on tax-evaders Which values of land should be used in the system?

Tools Declaration of payment of all municipal taxes Tax campaigns Conditional projects Voluntary payment Break through point for payment (1/3 pays?)

Property Taxation Nicaragua Fiscal Decentralisation Seminar Copenhagen 18 August 2005 Philip Bottern, consultant LGDK