Local Executive Authorities to Monitor Citizens for Rigorous Payment of Real Estate Insurance Fees

By the decree of President Ilham Aliyev on December 22, the powers of local authorities have been expanded. Now they control the citizens' rigorous payment of the insurance fees for insurance of apartments, residential buildings and houses.

Since 2011, there is a law "On compulsory insurance", according to which, apartments, residential buildings and houses are subject to insurance, depending on location. In Baku, insurance of apartments is 50 manat, in Ganja, Sumgait and Nakhchivan - AZN 40, and in other cities and regions - 30 manat.

However, many owners do not comply with this legal requirement. According to the Code of Administrative Offences, there is a penalty in the amount of 10 manat for evasion of citizens from property insurance.

The economist Azer Mehdiyev believes that the government, rather than to create a normal insurance market, creates an environment in the conditions of which the local executive power actually becomes a tool to raise funds for insurance companies. Therefore, this process can be called a collection of "tribute" from the citizens for their apartments.

The exception is the families receiving targeted social assistance from the state. Insurance for an apartment for them is to be paid from the state budget.

It will be recalled that this year changes were made to the Tax Code, according to which since January 2015, municipalities will collect property tax on individuals under the new rules. Earlier this tax was levied at the rate of inventory value, which led to confusion. Starting next year, the municipal tax sale will be 0.4 manat per m2 over 30 m2 of a total apartment area located in Baku city. In this case, this tax may be applied a ratio of 0.7-1.5 times, depending on the location of the property. In Ganja, Sumgait and Absheron citizens will pay 0.3 manat per m2. In other city areas the tax will be levied at the rate of 0.2 AZN / m2, and in other type settlements it will be AZN 0.1 / m2.

Many experts believe that the property tax, as well as its compulsory insurance will be a difficult burden for many families. Despite government claims that only 5% of citizens live below the poverty line, according to independent experts, the poorest in the country are much more. Thus, when calculating the cost of living, the government did not include the amount of insurance and property tax in it. In 2015, the cost of living is approved in the amount of 131 manat per person per month. 08B