Farmers pay too much real estate tax

Farmers pay a disproportionate amount of Property Tax (OZB). This municipal tax is based on a much higher rate for a commercial property, such as a barn, than for a bourgeois home. The difference is determined by the earning capacity, where assumptions are used instead of real figures. This must change.      

It has struck me for years that an owner and user of a commercial property pays much more in municipal taxes than a home owner. Municipalities have different rates. On average across the Netherlands, the property tax for a home is 0,0957% and for a commercial property it is 0,5485%, provided you are also a user (rates 2019). So for a shed or shed you pay almost 6 times as much property tax as for a farmhouse.  

Why is the property tax for a commercial building, such as my potato shed, so much higher? What extra facilities do municipalities offer in exchange for the much higher OZB? Since I could not discover any municipal benefits for the owners/users of a commercial shed or shed, I called the town hall anyway. When asked what extra services they offer for these extra taxes.

fall off my chair
A friendly gentleman answered the phone. "No, municipalities do not offer additional facilities to the owners/users of business premises". According to the municipal official, you can assume that an owner/user of a commercial property is more financially sound than a home owner. I nearly fell off my chair in surprise.

When determining the value of a commercial property, transactions made and earning capacity are therefore taken into account. The government therefore assumes that farmers with a shed or shed have a much greater earning capacity than people who earn a living with the government or in the business community.

A generous annual income
But let's take an example in my own municipality of Noordoostpolder, with the local rates. Suppose, in the vacated former farm next to me, lives a well-to-do couple with a generous annual income of all together €150.000. The farm has a WOZ value of €500.000. The property taxes for my neighbor are €500.000 x 0,1465% = €702,50.

My home has an estimated value of €300.000 and my business premises of €700.000. My annual income is €50.000. The costs for my home are €300.000 x 0,1465% = €421,50. For my business premises, however, I pay €700.000 x 0,3802% = €2.661,40. So I pay a total of €3.082,90 and my neighbor €702,50. That is almost 4,5 times as much, while my neighbors have a much greater earning capacity. Neighbor pays 0,46% of his income to the municipality and I 6,16%.

Working with equal rates
When the municipality can explain to me that they do much more for me than for my neighbor, then I can understand and justify this difference. But the council cannot. In the case of the property tax, municipalities are setting unfair rates. The rates are fairer if municipalities at least work with equal rates. And even more fair when income and earnings are actually taken into account.

This must change!

Jaap Haanstra

Jaap Haanstra is an arable farmer in Luttelgeest and chairman of the AgriFacts Foundation. In addition, he has worked for various agricultural organizations over the past 30 years. Haanstra writes his columns in a personal capacity.

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