Research by the University of Groningen (COELO) shows that in 2023, homeowners with a multi-person household will pay an average of 925 euros in municipal taxes, an increase of 52 euros compared to last year. The water authority tax will also increase by an average of 30 euros for homeowners in 2023. Local authorities' taxes (including the municipality and water authority) weigh heavily on taxpayers' wallets. Arjen Schep, Professor of Local Government Taxes at Erasmus School of Law, explains the importance of local government taxes and what happens with tax money in Het Parool.
For municipalities, municipal taxes are only a small part of the budget. Schep explains: "The largest part comes from the national government or from benefits. Fifteen per cent of a municipality's income comes from taxes. Property tax averages six per cent of the budget, but many differences exist between municipalities. For example, the revenue from parking taxes in Amsterdam is greater than that from property taxes."
The sewage tax and waste tax are cost-covering taxes for sewer maintenance and the collection and processing of municipal waste. Still, the municipality can use the property-, parking-, and dog taxes for general purposes. Schep explains: "Municipalities can use those general taxes to finance certain policy objectives. The money is not labelled."
In contrast to municipalities, water authority tax is the only source of income for the water authorities. Schep continues: "The 21 water authorities do not receive any money from The Hague. Taxes fully pay for their costs, and these are cost-covering."
Property value
The terms 'Property value' and 'municipal tax' are often used in the same sentence, as several municipal taxes depend on the Property value of a home. The Property value of homes is recalculated yearly. This is largely done automatically, based on an advanced valuation model. The model is based on actual market sales of homes around a value reference date (1 January of the previous year), the value of the of the homes that have not been sold is are recalculated based on the model of houses that have been sold. Since the property prices have been dropping lately, many homeowners find it remarkable that the Property value has increased by an average of seventeen per cent this year and did not decrease. This is due to the value reference date being 1 January 2022 for this year's assessments. Therefore, the decrease in value will only become visible next year. "Usually, municipal property tax rates decrease when the Property value increases. So focus on the amount of taxed you have to pay and do not just focus only on the increase in the Property value," Schep states.
Objecting to this value increase could be helpful, according to Schep: "You often see that the value continues to rise annually. If you doubt this, checking if it's correct is useful. Many municipalities have a phone panel ready when the tax bills are sent out. They make an effort to answer questions, and it's a lot more accessible than a few years ago. You can also easily file an objection against the change of Property value through the municipality's website."
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