?In the previous article in this series, it was shown that it was desirable for municipal corporations to have knowledge of all the relevant details of properties located in the regional area. Most important would be the names of the owners of these properties. The best way to monitor ownership and the use of properties is by the control of the property tax system. A lot has been said recently about the proposed new property tax system that is about to be introduced, but there has been little discussion on the relevance of the local government bodies in this process. An examination of the existing law on this matter can be quite revealing. At present, the collection of property taxes, or land and building taxes as they are commonly referred to, is the legal responsibility of the local govern- ment bodies.
The de jure (as of law) situation is comprehensively dealt with in Part V of the Municipal Corporations Act, 1991, from sections 76 to 107. However, the de facto (as of fact) situation is quite different. Section 77 states simply: "There shall be raised, levied, collected by and paid to each corporation for the year beginning the 1st January, 1991, upon and in respect of every rateable hereditament within the municipality, an annual rate of tax not exceeding ten per cent of the annual rateable value of such hereditaments as determined by the council." Further, section 78 of this Act defines the annual rateable value as the gross rental value of a hereditament as determined by the assessor, less certain allowances including the loss of rent. Section 82 of the Act gives detailed guidelines for the assessment.
Implementation of 1991 Act
In the 14 local government bodies, there are five cities and boroughs and nine regions. The cities and boroughs have traditionally collected their own property taxes long before the introduction of the Municipal Corporations Act in 1991. For the past six years, the nine regional corporations have been making preparations for the taking on of this responsibility and are far from completing this exercise. Dozens of young people have been recruited and are being trained in this process. In the new Local Government Bill, 2009 which is now before the Parliament, the only mention made of property tax is contained in section 44(3) (f), which states that in deciding on the quantum of financial allocation to be made to a local government body, the estimate of property tax projected to be collected by the Revenue Authority from within the municipality during the financial year shall be taken into account.
The proposal in the new Local Government Bill is to move the collection of property taxes entirely away from local government bodies, including the cities and boroughs, to central government, and the responsibility for the collection of these taxes will be that of the proposed Revenue Authority.
This undoubtedly would be a major setback for local government in the reform process since it is one of the more important ways to generate the required connectivity between the residents of an area and their local government administration. Further, the removal of property rates and taxes away from local government to central government would take away the sole element of self-sufficiency of the local government bodies.
Reliance on local government
To illustrate the almost complete reliance of most of the local government bodies on central government, reference is made here to newspaper reports appearing in November, 2004, of a meeting between the Public Accounts Committee (PAC) and the Sangre Grande Regional Corporation. It was revealed by the then CEO of the corporation, Cassim Mohammed, that the corporation receives an annual subvention from government of about $40 million to $50 million, but the corporation could only raise a mere $5,000 to $6,000 a year from its own activities. Explaining to an astonished PAC, CEO Mohammed said that the revenue streams came from "a few cemeteries, etcetera." Removing the property tax system from local government would make the local government bodies totally dependent on central government.
The present administration stated clearly in page 13 of the White Paper on Local Government Reform 2004, "local government financing from the national budget was clearly inadequate. Moreover, approved allocations were not fully disbursed and they were often irregular and unpredictable." One would think, therefore, that every effort will be made to move local government to a greater degree of self-sufficiency. The new bill on local government reform has taken the opposite stand in relation to the government's position on property taxes. What appears to be quite clear is the absence of a clear philosophy by the PNM in dealing with this issue. We know that in 1991 the NAR had put in place sweeping reforms in local government including comprehensive legislation dealing with property taxes to be handled exclusively by the local government bodies. After 18 years with three PNM and one UNC administrations, a complete system is still not in place to implement the law.