Valuation Surveyor on Land and Building Taxes: Homeowners in for a Shock
Many homeowners will be in for an unpleasant surprise when they go to pay their Land and Building Taxes under the new scheme announced by Finance Minister, Larry Howai. In his Budget Presentation, Howai proposed the return of the tax in three phases over the period 2014 to 2017. Howai has proposed Stakeholder Consultations and Valuation of the properties during this period, as the first phase, which will value all industrial land, including plant and machinery, is set to take effect on July 1, 2014. The second phase proposes a tax on commercial properties and residential and agricultural properties will fall into the third and final phase.
A deductible allowance to provide relief to certain agricultural land owners and low-income homeowners is one of the considerations put forward. But Valuation Surveyor, Afra Raymond, points out that a significant number of properties were assessed on the basis of valuations that were over 40 years old. If those valuations are updated, property values and the resulting taxes will increase sharply. “What is more significant,” Raymond added, “according to official figures disclosed in the 2009 Budget, over 200,000 properties are not on any property tax records at all.”
Raymond said, at this point, he did not have enough details to comment properly on how the valuations will be undertaken, the length of the process or costs. Nor could he say, how much homeowners will be expected to pay under the new valuations.
Asked if the proposal is reasonable and realistic, Raymond – the President of the Joint Consultative Council (JCC) for the Construction Industry – said it was long overdue. He noted: “In 1985, about two per cent of the State’s tax income was via those taxes.” In 2009, that figure had declined to 0.0018 per cent. “Given the huge store of wealth which we all know that property represents, it ought to be liable to some significant taxation.” Opposition Leader, Dr. Keith Rowley said: “If you own property, you have to pay a tax based on the valuation.” The Congress of the People (COP) launched a Popular “Axe the Tax” campaign when the idea was first proposed by the People’s National Movement (PNM), before the 2010 General Election. Rowley, in his contribution to the budget debate, explained, “The law as passed under the PNM had called for a residential percentage on your tax of 3.5 per cent. This bill, laid in the Parliament and allowed to lapse, has called for a 7.5 per cent tax.”
He said regardless of how the Government tried to spin, rename, rebrand or reposition the land and building tax scheme, what they are reintroducing is Property Tax, only with a sharper increase in the rate. Raymond commented: “One of the significant issues is that the proposals originally put forward by the PNM had considerable merit, in my view there was one area in which those proposals were backward-thinking. “In my opinion, the PNM had proposed that the funds raised by their new property tax were to go direct to the Consolidated Fund,” he said. “The old arrangements had those funds accruing directly to the account of the five Municipalities (Port of Spain, San Fernando, Point Fortin, Chaguanas, Arima). That shift would have totally denuded the municipalities of event the limited financial independence they have at this time.
“Under the old arrangements (Pre-2009), 15.75 per cent of the municipalities’ money came from property taxes, but under the proposed arrangements, all of that money would have gone direct to the account of Central Government and the municipalities would have had only 2.16 per cent of their money accruing independent of central government. “I am therefore fascinated by the prospect of property tax proposals emerging at the same time as new local government arrangements and the financial arrangements are very important to discern where the real power exists.”