Land and Residential Property Taxation Model. Concept of Tax Zoning in Municipalities

Analysis of the current property tax structure, which is calculated in proportion to the area of land and buildings, leaves no doubt that this is not an appropriate solution in terms of tax efficiency and equity. Property tax reform is necessary; however, the concept of ad valorem tax is challenging to introduce and implement. An alternative to value-based property tax could be the concept of tax zoning, particularly in heterogeneous urban areas. This would partially expand existing legal regulations, which allow for differentiating tax rates for different types of taxable items, particularly considering their location. The article presents this concept as one that could effectively replace the existing residential property taxation system in a short time. Due to the significant socio-economic diversity of urban units, it is necessary to identify factors reflecting their specificity. The article attempts to quantify the criteria considered significant for residents of Polish cities. A combination of various measures allowed for the indication of the potential effects, both fiscal and non-fiscal. The proposed concepts were validated through empirical analysis based on data from publicly accessible databases. The research results emphasize the importance of the precise design of the property tax system, which can have significant consequences for the dynamics of the real estate market.