A property tax is a tax levied on the value of a property. Property taxes are usually collected by the jurisdiction or municipality in which the property exists, in Canada this the city in which it resides. Property taxes can also be collected by national and state governments. The size of the tax is often expressed as a millage rate indicting a percentage of tax on every "mill" (per 1000 units of currency) of value. Property is assessed based on its market value, because the market value of a property can fluctuate over time, the tax is levied as a percentage to make it proportional to the value of the property.
Property taxes are often used to determine the appropriate level of revenues to apply to various services to the community such as emergency services and schools (if funded through property taxes). Each service that is dependent on the property of an area can add "mills" on to the millage rate of a property to ensure that the revenues collected match the needs of the services.
For Further Reading
- J.Black, N. Hashimzade, and G. Myles. (2009) "Direct Tax." [Online], Available: http://www.oxfordreference.com/view/10.1093/acref/9780199237043.001.0001/acref-9780199237043-e-823?rskey=Sr7js2&result=1, 2009 [Aug 14, 2016]
- Investopedia. "Millage Rate." [Online], Available: http://www.investopedia.com/terms/m/millagerate.asp[Aug 14, 2016].