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Published by am_bellows
A note on the rating system in Jersey, written in 1994
A note on the rating system in Jersey, written in 1994

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Published by: am_bellows on Feb 15, 2011
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The Mathematics of the Parish Rate and its Deficiencies
Page 1/4
The parish rating system in Jersey is a tax on property values. It is confused, because it is a two stagetax. First, a rateable value of the property is derived, and expressed in total of “quarters”. Then theParish decides to set a value per quarter to be charged upon property owners and occupiers. Thequarters value can be appealed against, the later assignment of a value to that cannot. Therefore, it isimpossible to determine the value which will actually be taxed on the basis of quarters. However, thispaper is not concerned with this part of the system.The working of the assessors in determining such a rate is obscure and hidden; there is no equivalentto the income tax law, which sets out in details the various factors involved in calculating tax, andwhich is available to the general public.It is clear that some calculations must be made from the Parish property schedule, which is theequivalent to the property tax what the income tax schedule is for income tax. It is the basic source of data, and therefore should be the basis for the calculation of rateable value.I have therefore constructed a mathematical model of how the rateable value might be derived fromthe property schedule and how, in fact, it should be derived if it is done so objectively and impartially.If a different formula is used for assessing the rate, I would be most interesting in examining it forevidence that it is as impartial and objective as the one I derive, as would doubtless most Parishionersin the Island.It is likely that the actual methods used for assessing a rate are far more subjective than I suggest here,as there is no codification of rating law equivalent to that for income tax. However, I aim to show theexisting rating system in the
best possible light
.My intention is to show that
given the strongest case for the existing rating law, it is stillfundamentally
and in need of major revisions.
For a basic model of the rating system, let us consider the schematic of a simple (or “ideal”) two roomhouse.The rate can be derived as a function of the number of rooms as follows:f(n[A])=k[A]n[A]where k[A] is an unknown but fixed constant, and n[A] is the number of rooms.Clearly this is an oversimplification, but it will do as a start.The rate is derived from the information collected on the rating form n[A], and we may assume that amultiply k[A] which is constant for all rooms gives the rateable value k[A]n[A]. We would expect thisof an impartial rating system on the Jersey model.An examination of the rating form shows that different classes or types of room are recorded, e.g.,living rooms, bedrooms, conservatory, garage etc.AA
The Mathematics of the Parish Rate and its Deficiencies
Page 2/4
So a more detailed schematic would be as follows:
The function now looks as follows:f(n[A],n[B],n[C],n[D],…)= k[A]n[A]+ k[B]n[B]+ k[C]n[C]+ k[D]n[D]+…where A,B,C,D, represent the classes of room, and k[A],k[B]…represent constant multipliersassociatedwith each class of room.However, this is still a simplification.The rating form also considers the type of property (flat, bungalow, detached, terrace etc) and some of the facilities available (central heating etc), and possibly the location (based upon postcode).These factors (which we will term F1,F2,F3) effect the entire property, so must be taken as a multiplyon the derived rate so calculated so far.f(n[A],n[B],n[C],n[D],…,F1,F2,F3,..)= (k[A]n[A]+ k[B]n[B]+ k[C]n[C]+ k[D]n[D]+…)k[F1]k[F2]…Again for an impartial system, we would expect the multiplier for a factor (e.g. the type of property,F1) to be a constant based upon that type of property k[F1].This then is a mathematical model for the formula for calculating rates derived from the total of theinformation on the rating form.It will be seen that from a mathematical point of view, the basic input is derived from
- and not
calculating spaces -
in our formula this is represented as n[A],n[B], etc.It is therefore a calculation based upon the
properties of a dwelling and not the
properties of the dwelling.This difference is important, as can be seen if we return to our schematic of a house with twoamended versions:
Figure 1
Figure 2
The Mathematics of the Parish Rate and its Deficiencies
Page 3/4
Figure 1 is our basic schematic.In figure 2, we have the same number and type of rooms, but one room is considerably larger than theothers, so that the whole dwelling is larger by about ½.In figure 3, we have partitioned one of the rooms of the original to make two rooms, so that we nowhave increased the number of rooms of type B. We may consider what was originally a kitchen-dineris now a kitchen, and a dining room, both smaller that the combined area.According to our derived formula:-The house in figure 2 has the same rateable value as figure 1.-The house in figure 3 has a greater rateable value than figure 1.Now it may be objected that there is a further value to take into consideration - the assessors’ ownevaluation of the property, as seen from an outside view. The assessor knows that figure 1 and figure 2are not identical.We may incorporate this as a “personal judgement” into the formula as follows:f(n[A],n[B],n[C],n[D],…,F1,F2,F3,..,P1)= (k[A]n[A]+ k[B]n[B]+ k[C]n[C]+k[D]n[D]+…)k[F1]k[F2]…k[P1].This is again a multiplier on the basic derived value, where k[P1] is a function of a judgement givenby P1.This is a “corrector” to adjust the rate so that the difference between figure 1 and figure 2.However, we must make two comments on the above “corrector”.1) It does not rectify the difference in rate between figure 1 and figure 3.2) K[P1] is not derived from an impartial value, but from a personal judgement. It cannot beconsidered equitable unless
at the very least 
it can be shown to be intersubjective, in other words, thatdifferent assessors (working without consultation) give
the same value to the multiplier. Noscientific evidence has ever been forthcoming that this is the case, and I think it unlikely that it wouldbe. By way of illustration, an equivalent procedure to (2) under the tax law would be if theComptroller were allowed to make an
ad hoc
increase in your tax assessment based upon his personal judgement of your personal wealth.
The rating system, for all that it is a two stage system (based upon both rateable value and the settingof a Parish rate) is essentially a system of taxation - a tax on property rather than income.A system of taxation should be impartial and objective, not based upon personal factors. For a systemto be fair, it should be possible for any reasonably intelligent person to perform the calculation of taxation and always derive the same result.
 Indeed, it should be possible for a computer, suitably programmed, to take the input and produce the same result 
. This is certainly the case with the incometax law.
Figure 3

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