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3. What is the mill if the tax revenue from residential assessment happened to be $10...

3. What is the mill if the tax revenue from residential assessment happened to be $10 million and the total assessed value is

3. What is the mill if the tax revenue from residential assessment happened to be $10 million and the total assessed value is $8 billion? Based on this if a building has a value of $5 million dollars, what will be its property tax? [4 marks)
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Solution

1) What is Mill?

Mill rate is a tax rate- the amount of tax Payable per dollar of the assesed value of a property. Mill is derived from the Latin word millesimum meaning thousandth. The Mill rate is the amount of tax payable per dollar of the assessed value of a property.The mill rate is based on mills. It is a figure that represents the amount per $1000 of the assessed value of the property which is used to calculate the amount of property tax.

Government entities set mill rate based on the total value of property within their jurisdiction, to provide the necessary tax revenue to cover projected expenses-roads, schools, emergency services and so on in their annual budget. Property taxes are calculated by multiplying the assessed,taxable property value by the mill rate and then dividing that sum by 1,000.

Mill Rate = (Amount to be raised/Total taxable Assessment)*1000

= ($10,000,000 / $8,000,000,000) *1000

= 1.25

Property Tax = ( Mill Rate * Assessed Value) / 1000

= (1.25 * $5,000,000) / 1000

Property Tax  =$6,250

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