Summary

Property taxes represent one of the most compulsory ones. This is the outcome of the fact that in earlier times, realty was the only thing through which the government could influence on people. Property tax includes the tax of land, construction process and constructions. It's a regular tax and is paid once a year, whether the property is exploited or not. This is a local tax and has an important fiscal function for the budgets of the areas where it's on. Concluding from the international instruments of regulating the property taxation, we can say that Georgia needs to draw out a more effective system of it.

Nowadays, based on the analysis of the Georgian taxation system, we can say that the state regulation level of property taxes is not enough. Experience of foreign, developed countries shows us that the state regulation of economic relations has an integral part in economic and social development. Property relations area demands a massive involvement of the state regarding the property taxation fiscal component as well as economic relations mechanism, which includes some of the stimulating elements.

Creating and implementing “Property taxation development concept in Georgia” would be expedient. The main principles of this concept should be based on the following: simplicity of property taxation system, differentiation of tax rate regarding quality and location, taxation burden allocation in the area of residential properties, smart and fair formation of taxation stimuli and preferential duties system, creating and using of the untaxed minimum.

The inevitability of improved property taxation system is caused by the necessity of the rational usage of the land and the property based on that land. The existing state taxation accounting and withdrawal mechanism mainly serves fiscal goals and has a less general-economic character, which itself makes it harder to use the means of exploiting lands, buildings and constructions effectively. The new property taxation system should facilitate the renewal of production base, establishment of new technologies, territorial development, effective usage of properties and “banishment” from the market of those, who cannot use their properties’ potential as the income source. Socialization of this tax is inevitable, based on which there should be the fair accounting of the property tax and withdrawal from budget based on the solvency of the owner.

Uniting land property tax and real estate tax, as the main directions of the existing property taxation, will give us a way to reduce property taxation administrative costs importantly and will establish the tax burden, which will transform the ineffective usage of the property by the owners as a disadvantageous objectivity.