Tartu will raise land tax in the administrative territory of the city to 2.5 percent, the maximum permitted by law, which should increase the budget by €400,000 and help pay for future infrastructure developments.
The tax changes will come into effect from Jan. 1, 2020 for arable land and natural grassland used for agricultural production. This will be an increase of 0.5 percent on 2019.
Municipalities can decide for themselves what percentage of the value of the land they will collect for land tax from between 0.1 percent to 2.5 percent. Between 2002-2018 land tax in Tartu was 1 percent.
The draft budget of the city of Tartu estimates the land tax rate will generate approximately €2 million revenue to the city. This will be €400,000 more than in 2019. The change in the flat tax rate will affect almost 16,000 land taxpayers, including about 14,000 people and 1,900 legal entities.
Deputy Mayor of Tartu Reno Laidre said the council wants to increase the income base from land tax to pay for future projects.
He said: "The city has ambition and a plan to organize the school network, make the school route safe, invest in roads and streets, we will become the European Capital of Culture, there are many things to do and all these things need money. Including Education. We do not have labels next to sums in terms of exactly where single euro comes from, but we have a generic income base and personal income tax is the biggest source of income, but land tax is also an important source of income."
Land tax is not paid if it amounts to less than €5. Based on the data of the Tax and Customs Board this year, the maximum tax rate of 2.5 percent has been applied in most local governments.
Editor: Helen Wright