Do not get upset with all those taxes you pay. True enough; taxes can sometimes be a big deduction from your money and savings. However, there is a good reason why we pay taxes, particularly property tax. Here is something for you to understand the world of property tax.
Property tax, or it may also be called as realty tax or ad valorem tax, is an annual tax on real estate. It is collected by the government so that there will be enough funding on government structures and groups as schools, libraries, police and fire departments. Citizens pay their tax based on their property or property value.
Determining the amount of tax to be collected is based on the re-evaluation of the property’s value. Most of the times, the value of tax collected from a specific property is not increased even though the value of a property increases from time. The value of the property when it was purchased is the determining factor on the amount of the tax to be collected on it. However, in some cases, reassessment is considered. This happens when, for example, a house is built on a piece of vacant land or constructing an extension to an already existing home. If this is so, the amount of tax to be charged will definitely increase.
Funds collected from the taxes are used as a source of local revenues. Property tax is the main source of revenue for the government aside from income tax and sales tax. Being the primary source of the tax has an important role in delegation and self-sufficiency of local government. This delegation or decentralization of government integrates the power to increase revenue in independence and the power to use the funds from property tax accordingly.