By Kevin Ramnarine
The Ministry of Finance has signalled the re-introduction of Property Tax. Most of the population already know it’s the law, they know it’s not new and they know it obtains in other countries. However, it is debatable whether it is being re-introduced at the right time given the present state of the economy and the strains on the population.
The leadership of the Ministry of Finance must know that their role is not only to sit in the Eric Williams Finance Building and balance budget numbers. Their decisions must be based on an appreciation for the social and economic equilibrium in the country.
The nation is buckling under the weight of rising prices for groceries and medicine. Many families have unemployed university educated children who cannot find a job or have lost their jobs. The price of fuel has been increased multiple times in the last 20 months while the Minister of Finance poked fun that the population had not yet rioted. The Ministry of Finance is barrelling ahead with the implementation of this tax and in the process ramming it down the throats of the population.
The imposition of property tax on small and medium size businesses will push many of these businesses to the brink of bankruptcy and closure. Businessmen already have to pay more business levy and green fund levy. To survive they will have to send home workers or transfer the cost of property tax onto the customer. In addition, businessmen may see property tax as a disincentive to future investment. Why invest in new plant and equipment if you are going to be punished for investing?
One businessman in the energy services sector expressed his concern on my Facebook wall saying, “Having to pay more taxes on razor thin margins in this downturn is a terrible thing and as an entrepreneur that’s the same bullet hitting home as well.” One business chamber has cautioned the Government on the lack of clarity surrounding the process. They have asked for details on the valuation and implementation, particularly where it relates to uncovered plant, rigs, and machinery. What is the impact of property tax on companies with plants at Point Lisas?
There are many questions that arise. The Minister of Finance seems to be confused. At a post-Cabinet press conference on March 23, 2017, he declared that all systems were go. He announced that notices of assessment would be posted or hand-delivered to owners and occupiers in a few weeks.
So, the Ministry of Finance and its departments were ready to roll. In the draft estimates of revenue, under head 2 “Property Tax”, it shows that the Minister of Finance expected to collect $TT 500 million in fiscal 2017 compared to zero in 2016, zero in 2015 etc.
In light of the above, the Minister of Finance should explain when these taxes will be payable from given that he has said we should expect notice of assessment soon and he clearly expects to receive his taxes in 2017.
I say this because it cannot be that he expects these monies to be paid in 2017. Section 17 of the Property Tax Act of 2009 says the notice of assessment must be served on or before March 31st. Since March 31st, 2017 is gone, it means that the notice of assessment can only be next served on or before March 31st, 2018 which means payments will commence in 2018.
The notice of assessment can only be served if the Commissioner of Valuations has received “returns” in accordance with Section 6 of the Valuation of Land Act. These returns will inform the valuation which determines the annual rental value. So, just like his colleague Minister Garcia, Minister Imbert is jumping the gun.
The other issue is the capacity of the various institutions to administer this new regime. Is the valuation department of the Ministry of Finance adequately resourced? Is the Board of Inland Revenue adequately resourced? Is the Tax Appeal Board adequately resourced? Are the various district revenue offices adequately resourced? I’m sure the answer to these questions is “no”.
How will citizens pay this tax? Will they have to stand in long lines and suffer for hours? In Jamaica, property tax payments can be made online. Have arrangements been made for online payments in T&T? What about the elderly? What about those living abroad? Questions abound.
Citizens are also highly sceptical that their property taxes will result in improved public services. Citizens have questioned the valuation process and its vulnerability to bias and corruption. Some say that we already have to pay the onerous stamp duty when acquiring property. The long list of documents the Commissioner of Valuations requires will add more stress to the population.
I have heard that the property tax, in its original conception, was aimed at the energy sector moreso companies that operate in Point Lisas and Atlantic. I would love to see how the Commissioner of Valuations determines the value of an ammonia plant or an LNG train.
The Government should pause and think through the implementation of this tax so they minimize the stress it can cause the already stressed population. Mr. Minister, relax the tax.
Guardian April 25 2017