Push to reimburse over-taxed homeowners

41 percent of homeowners had their properties over-valued by at least 15 percent between 2003 and 2011 which resulted in them paying too much in property tax

The government is under political pressure to compensate homeowners who paid too much property tax after the tax authorities over-valued their homes.

Yesterday the national auditor, Rigsrevisionen, released a damning report that condemned both the tax agency, Skat, and the Tax Ministry for continuing to inaccurately evaluate property prices even though it was aware of the problem.

“The Tax Ministry administrated the property evaluation division very poorly and in full knowledge that the area has been problematic,” Rigsrevisionen stated. “All citizens and businesses are therefore not certain to receive fair and equal treatment when their properties are evaluated.”

Skat took over property valuations from local councils in 2003. These valuations – which are legally supposed to be marginally under market values – determine how much homeowners need to pay on a variety of different property taxes. Skat earned 38 billion kroner from property taxes last year.

But according to Rigsrevisionen, Skat got property valuations wrong in 75 percent of the 1.7 million homes they evaluated, meaning that many homeowners either paid too much or too little property tax.

In the second half of 2011, 34 percent of homes were undervalued while 41 percent were overvalued. All were at least 15 percent off from their actual sale price.

All six tax ministers since 2003 were criticised in the report, though the burden of responsibility has fallen on Kristian Jensen (Venstre) – the tax minister under the former government between 2004 and 2010 – who has taken responsibility and apologised that so many Danes paid too much tax.

He explained that he failed to act because he was trying to develop a new system for taxing property that did not have to rely upon state-evaluated property prices, though he acknowledged that this was not a sufficient excuse for not fixing the system.

The number of badly valued homes rose significantly since Skat took over the job in 2003 and despite warnings in 2007 that they were failing at their job, nothing was done to rectify the problem.

The deadline for complaining over property evaluations prior to 2011 has passed, although political pressure is building to reimburse homeowners whose homes were overvalued.

Opposition parties Venstre, Liberal Alliance, Konservative and Dansk Folkeparti, as well as far-left party Enhedslisten, all support letting overpaying homeowners apply for compensation.

“When Skat makes a mistake then Skat needs to correct it,” Venstre tax spokesperson Torsten Shack Pedersen told Berlingske newspaper. “The people who have paid too much tax need to get their money back.”

But whereas the opposition want Skat to re-evaluate all the overvalued property prices, they may have to make do with Enhedslisten’s proposal to open a new period for accepting complaints – as long as the opposition helps find the money.

“We need to look at the opportunities for allowing complaints about the errors because they need to be fixed,” Enhedslisten tax spokesperson Frank Aaen told Berlingske. “I hope the former government parties will help find the money that needs to be repaid. It cannot be welfare that finances errors that developed under the former right-wing government.”

Tax minister Holger K Nielsen (Socialistisk Folkeparti) at first stated yesterday said that the government would not compensate homeowners, but later warmed to the idea of extending the complaints period.

“I currently won’t make any promises,” Nielsen told Berlingske newspaper. “It’s an incredibly difficult challenge. Partly because we don’t know how it will work administratively, and partly because it’s hard to document that people have paid too much tax.”