FINANCIAL IMPACT OF REAL ESTATE TAX ON LOCAL GOVERNMENT TAX REVENUE

Abstract

The real estate tax is one of the direct taxes administered by municipalities and it is the only one tax in Latvia that is fully credited to the local government budget. The research object of the article is the financial impact of real estate tax on budgets tax revenue of local governments. The aim of the research is to analyse the impact of real estate tax revenue on municipal budget in the administration context of tax expenditure. In the frames of the research following hypothesis was formulated - real estate tax has a relatively small impact on revenue of municipal budget, but it has relatively high administration costs. In order to analyse the financial impact, it was researched the expenses of real estate tax administration. As the basis for the study the estimated and actual tax administration expenses of one municipality was used.