The Prague 5 town hall plans to increase the coefficient for calculating property tax in its area from the current value of 2.5 to 4.5, which will mean a near doubling of the tax. It was approved by councillors today. According to the approved document, after the increase, property tax revenue, which was CZK 89.9 million last year, can be expected to increase by CZK 64 million a year. However, the change requires a change in the city-wide ordinance, which must be decided by the city council. The intention was criticised by the opposition, which did not support it.
In 2019, Prague passed a citywide ordinance that doubled the rate for commercial properties and allowed districts to determine how much tax they want for residential properties through a coefficient. By setting the coefficient at 2.5, the then-Prague 5 leadership left the rate at its current level.
“Our goal is to improve the financial health of the district and to stabilise the budget in the long term,” Jolana Dočekalová (Praha 5 Sobě), the district’s councillor for finance, justified the planned increase today. She added that if the former management of the town hall had chosen a higher coefficient already from 2020, the financial situation of the district could have been better. “We plan to use the funds to implement the goals from our programme declaration,” she added.
“I am convinced that the town hall itself has enough reserves that could be used to balance the economy. You don’t need to raise local taxes to do that,” opposition councillor and former finance councillor Jan Kavalírek (TOP 09) said, adding that the coalition could have found further savings in the budget instead of trying to raise taxes. He also criticised the fact that the coalition did not specifically state what it wanted to invest the extra money in.
The government also plans to increase property tax as part of a package of measures to rehabilitate the budget deficit. According to the announced intention of the finance ministry, the tax would be doubled from next year depending on the local coefficient. The additional revenue over and above the current tax collected by local governments would go to the state budget after the increase. Opposition councillor Tomáš Homola (STAN) drew attention to the government’s plan and the cumulative increase for residents of Prague 5 if both increases are approved.
The tax on residential real estate is calculated according to the built-up area, and land is taxed separately. The tax base per square metre is two crowns for residential properties. This base is then multiplied by two coefficients – local and size. An amendment to the ordinance increased the local coefficient from level one to level two in the whole of Prague from 2020, but at the same time reduced the default value of the size coefficient from level five to 2.5. City districts could then set the coefficient up to a value of five, which effectively meant a doubling of the tax. This was done by 20 of Prague’s 57 town halls.
The district has a population of about 86,000 and includes Hlubočepy, Košíře, Motol, Radlice, Smíchov and parts of Jinonice, Mala Strana and Břevnov.
Source: CTK
