The City is not increasing its local property tax coefficient for private citizens

4/10 2023

At the September session of the City Assembly, representatives approved a new municipal ordinance defining the coefficients that are used to calculate local property taxes. From 1 January 2024, the local coefficient for Ostrava will be set at 1.7 for zones of heavy industry. 

The City is not increasing its local property tax coefficient for private citizens

Illustrative photograph. Author: Ostrava City Authority

The revenue from these zones (almost 100 million CZK) will go into the City’s budget, not into the budgets of the individual municipal districts (which receive the revenues from the remaining property taxpayers within their boundaries).

Ostrava is one of the Czech cities where the ecological impacts of heavy industry are felt most intensely. The extra revenues from the increase in property taxes for heavy industrial companies will help to compensate for their impacts across the city, being used to fund new greenery, street cleaning, revitalization projects in Ostrava’s parks, and other ecological projects.

Deputy Mayor Lucie Baránková Vilamová explained the reasoning behind the City’s decision: “A possible increase in the local property tax coefficient was discussed in detail at the level of the City and the individual municipal districts. Ostrava still uses the lowest coefficient, which is 1. In view of the current economic situation, energy prices and rates of inflation, we were determined not to increase property taxes for ordinary private citizens, despite the challenges this brings for the City’s budget finances.”

Although the City is taking a very conservative approach to property taxes, it is very likely that the tax rate will nevertheless increase by 80 percent for all payers; this is due to the Czech government’s fiscal reforms, which are currently being debated in Parliament. The reforms will also impact Ostrava by reducing the allocation of national tax revenues to local authorities; the City’s allocation will fall by around 400 million CZK. This will have a tangible effect on the City’s budget, and it is something that needs to be addressed. Mayor Jan Dohnal commented: “We will have to achieve cost savings amounting to 2 percent of the City’s budget, while at the same time maintaining the quality of the services we provide to citizens. The savings will not impact the wages of City employees or the staff of City-owned institutions, nor will they have a negative impact on our planned investments.”

Since 2013, Ostrava’s revenues from property taxes have remained at approximately the same level, around 241 million CZK. After raising the industry coefficient to 1.7, combined with the nationally imposed 180% increase in the basic property tax rate, the City’s total revenue will be around 533 million CZK. Of this sum, 97 million will be retained by the City, and 436 million CZK will be distributed to the budgets of the individual municipal districts.