Dana See­ta­hal

The new prop­er­ty tax regime came in­to ef­fect on Jan­u­ary 1, af­ter a stormy pas­sage of the leg­is­la­tion in both Hous­es of Par­lia­ment. The de­bate in the Sen­ate be­gan last Tues­day, af­ter be­ing passed in the House of Rep­re­sen­ta­tives with amend­ments. At the out­set, it was clear that the Gov­ern­ment was ac­cept­ing no amend­ments in the Sen­ate. Since this would ne­ces­si­tate re­turn­ing to the Low­er House for adop­tion–and there was no time for this–they want­ed the laws to be in ef­fect by Jan­u­ary 1. Why did the bills come to the Par­lia­ment so late? To date, no one has been able to an­swer –or tried, for that mat­ter. In the past, amend­ments aris­ing from the bud­get have usu­al­ly come to Par­lia­ment in Oc­to­ber, or at least by No­vem­ber.

In­stead, we had MPs hav­ing to es­chew a Christ­mas break of even one week to rush through a bill dur­ing the wee hours of the morn­ing. That dis­re­spect demon­strat­ed by the Gov­ern­ment was enough to turn off any­one. Added to that, the rapid pas­sage of the bills led to a feel­ing of dis­qui­et–what was the rush? Since we have been op­er­at­ing for 40 years un­der the ex­ist­ing law, what dif­fer­ence would a few more months have made? That time might have en­sured that fi­nal leg­is­la­tion was not flawed by am­bi­gu­i­ties and un­cer­tain­ties that ex­ist in the bills passed.

Val­u­a­tion of Land Bill

The first of the two bills to be de­bat­ed in the Sen­ate was the Val­u­a­tion of Land Amend­ment Bill. The Amend­ment Act abol­ish­es sep­a­rate val­u­a­tion dis­tricts. Pre­vi­ous­ly, every lo­cal au­thor­i­ty was a val­u­a­tion dis­trict. Fur­ther, there is now an onus on own­ers to sub­mit a re­turn of the land form to the Com­mis­sion­er of Val­u­a­tions. The own­er is re­quired to in­clude in that form, among oth­er things, the "rental val­ue." This is one of the ob­vi­ous in­con­gruities in the new law, as was point­ed out in the Sen­ate. There is noth­ing called rental val­ue in the act; there is on­ly an­nu­al rental val­ue, which has a spe­cif­ic le­gal mean­ing. Did the Gov­ern­ment mean this? It seems so, but on Tues­day they weren't tak­ing any amend­ments.

There are oth­er points of dif­fi­cul­ty with this law. There is an onus on the com­mis­sion­er to make a val­u­a­tion of ei­ther (a) the site val­ue and im­proved val­ue or (b) cap­i­tal val­ue and an­nu­al rental val­ue of every par­cel of land. Since site val­ue is rarely used in T&T, it is ex­pect­ed that the com­mis­sion­er will have to do (b). The dif­fi­cul­ty, as I see it, is that "land" is now de­fined in the new law as in­clud­ing all build­ings, all struc­tures, ma­chin­ery, plant, fix­tures, etc. The act puts a tremen­dous and dif­fi­cult onus on the com­mis­sion­er to place a val­ue on not on­ly every par­cel of land in the whole of T&T, but every build­ing, shack, plant and ma­chin­ery (eg, of­fice fur­ni­ture, tools). When is this like­ly ever to be com­plet­ed?

An­nu­al Rental Val­ue

The ARV is the an­nu­al rent that a par­tic­u­lar piece of land (mean­ing build­ing, plant, etc, as well) is "like­ly to at­tract." This is on what the prop­er­ty tax is based. Now, as far as va­cant land is con­cerned, there is no dif­fi­cul­ty, as the new act fix­es a per­cent­age for all types of land. So if you own a va­cant lot of res­i­den­tial land that is val­ued around $200,000, the ARV is 3.5 per cent of it, $7,000. The prop­er­ty tax on this is at most 3 per cent, about $200.

The dif­fi­cul­ty will arise in cal­cu­la­tion of the ARV of oc­cu­pied land. The com­mis­sion­er must now make an es­ti­mate of the ARV, not on­ly of the land, but al­so the build­ings and all the plant and equip­ment (in­clud­ing AC units which are fix­tures).

There­in lies the crunch: Tax­able prop­er­ty is not just land–it in­cludes al­most every­thing that you own on that land–ex­cept for chat­tels. The so-called dra­con­ian na­ture of the new prop­er­ty tax lies re­al­ly in the changes in val­u­a­tion of prop­er­ty and uni­fi­ca­tion of the land and build­ing tax­es. The oth­er mea­sures are not par­tic­u­lar­ly ob­jec­tion­able. The for­fei­ture pro­vi­sions ex­ist­ed un­der the old law, and were much more se­vere. They were nev­er en­forced, any­way. Al­so, hav­ing one body as­sess­ing tax­es is a good thing. Pre­vi­ous­ly, the cor­po­ra­tions set their own "house rate" un­der the Mu­nic­i­pal Cor­po­ra­tions Act, while prop­er­ties out­side of the am­bit of the cor­po­ra­tions fell un­der the Lands and Build­ings Tax­es Act.

Un­der the lat­ter act, tax­es were min­i­mal. The act spec­i­fied the tax­es for land. Most peo­ple paid $10. The build­ing tax was greater, but since the law al­lowed the au­thor­i­ties to cal­cu­late the An­nu­al Tax­able Val­ue (ATV) as 6 per cent of the cap­i­tal val­ue of the build­ing, this is what they did. This hav­ing been cal­cu­lat­ed, the tax was 7 per cent of that val­ue. Tax­es out­side the city/bor­ough ar­eas were thus at most a cou­ple of hun­dred dol­lars for most prop­er­ty. These are the peo­ple who will feel the pinch. There is now one prop­er­ty tax: a giv­en per­cent­age of the ATV, which is re­al­ly the ARV less 10 per cent for de­duc­tions.

Need for clar­i­ty

The idea of prop­er­ty tax re­form is not a bad one. What should have been made clear is (1) why the tax ex­ists at all, (2) how reval­u­a­tions of prop­er­ty are to be ef­fect­ed now (3) how the ARV on which the tax is based is to be de­ter­mined for oc­cu­pied prop­er­ty, and (4) where cit­i­zens can ac­cess in­for­ma­tion on their par­tic­u­lar con­cerns.