Forest land tax reductions – an effective payment for forest ecosystem services in Slovakia?

Abstract

Preferential land tax programs are used over 50 years and are mainly connected with nature protection and environmental goals. Nowadays, they are also considered as a way how to promote and support forest ecosystem services that arise from exempted forest land. In Slovak Republic national forest land tax reduction scheme exists for special purpose and protection forests, as well for other forests with special importance. The goal of the paper was to develop a multidimensional evaluation of this economic instrument for ecosystem service support in Slovakia. We evaluated how the forest land tax reduction fits into the payments for ecosystem services theory, which services are supported and what is the potential and implementation effectiveness according to theory of policy analysis. Even though, the forest owners and enterprises benefit from tax reductions, evidence regarding its visibility as payment for ecosystem service is low. Forest land tax reductions are considered as other economic incentive for ecosystem services support with moderate potential effectiveness. Despite the instrument have low visibility of FES supported from both sides – sellers and beneficiaries, its potential effectiveness is high, due its automatic and stable implementation without relevant implementation gaps.

The forest land tax systems in Slovakia and Portugal

“…Land taxes are a significant part of the municipalities' budgets in both countries. In Slovakia, problems arise with land with unknown ownership, which negatively affects the tax collection and reduces the municipal budgets (Báliková et al 2021). High land taxes decrease the probability of its retention by the owner (Polyakov, Zhang 2008).…”

“…Forest ownership in Slovakia is subject to municipal property tax payments. Forest land taxes are paid from productive forests, while tax exemptions exist (Báliková et al 2021).…”

“…The land tax reliefs represent more than a four million EUR annual loss for the municipalities budget in Slovakia. Conversely, the municipality's reduced taxes indirectly support the forest owners, who consider it necessary and as economic benefit (Báliková et al 2021).…”

“…As a result, non-marketable services provided by forests, well known as ecosystem services (MEA 2005), such as recreation or water purification, do not have any producer, property rights, or clear claim structures and fair transaction costs (Sternberg 1996). Preferential land tax programmes could help forest owners mitigate these discords (Ma et al 2014;Báliková et al 2021) and achieve various sustainable goals (EEA 2010;Kalkhul et al 2017;Frey et al 2019) or promote ecosystem services that arise from open-access forest land (Kilgore et al 2018, Báliková et al 2021. Consequently, tax exemptions can incentivise owners to categorise their forest from productive to another category, e.g.…”

Forest Bioeconomy from the Perspectives of Different EU Countries and Its Potential for Measuring Sustainability

“…However, the respondent's view differed from the view of the document analysis. If similar interviews, possibly through the Delphi methodology (such as that of D'Amato et al [79]), were included among the views on the FBE of the other selected countries, or if other experts from Czechia were interviewed (as described in Báliková et al [80]), the research would be enriched by the actual perception of the policy makers. This view would probably be most beneficial for Slovakia, which does not have a separate bioeconomy strategy, and whose other bioeconomy-related documents do not contain sufficient information (based on our findings).…”