The Government collected $143 million in 2009, the year that the old Property Taxes ended.
The current estimates of the Property Tax to be collected are to the tune of $504 million annually, so that is about three-and-a-half times more than what property owners paid in 2009, according to Afra Raymond, chartered surveyor and managing director of Raymond & Pierre Limited.
The revenue lost over the last 12 years since the axing of the tax could be more than $5.50 billion, Raymond estimated.
Raymond, a past president of the Joint Consultative Council for the Construction Industry (JCC), said the move to implement the Property Tax would be widely unpopular at a time of many burning issues, including the COVID-19 pandemic and the existing socio-economic situations.
Raymond believes that with only a slim parliamentary majority, the introduction of the new Property Tax will be a considerable gamble for the Government.
T&T is getting set to reintroduce Property Tax as one of the revenue streams which is expected to bring in millions of dollars for the Treasury.
While there is no specific date given for the rollout, the Government has started laying the foundation. They are attempting to populate the valuation roll. The Government has put out advertisements calling on citizens to file information on property and land ownership with the Valuations Division, Ministry of Finance (MOF). If citizens fail to do so by the end of November 2021, they can face a fine of $5,000.
With this move, Property Tax can be levied on residential and commercial properties and agricultural lands.
Raymond felt that the objections from the Opposition United National Congress elements are bemusing, to say the least. This, he said, is for two reasons–"Firstly, the official record of tax collections from 1993 to 2009 as shown in the graph and table below. When the UNC was in power in the seven-year period 1995-2001, there was a dramatic and unexplained decline in the collections of Land & Building Taxes, which are collected in the non-municipal areas. That decline was reversed when the UNC left office.
“Secondly, the People’s Partnership (PP) used ‘Axe the Tax’ as a strong slogan in the 2010 general election which they won with 29 out of 41 seats. With that rare three-fifths majority in hand, there was tremendous scope for the PP to have lawfully changed or removed any laws or arrangements it wished, without any need for PNM support. Like the Property Tax, for instance. But that never happened, for whatever reason.”
Raymond answers questions on Property tax
You are of the view that the revision of the property tax is long overdue, can you elaborate on the need for this, please.
Yes, Property Tax is long overdue. The last time Property Tax was collected in T&T was in 2009, so 2022–which is next year, which is what is under discussion–would make that a total of 12 years that no taxes were paid by property owners. By any measure, that is a tremendous benefit that has been enjoyed by property owners. In the previous taxation system, the property taxes were called House Rates for the five Municipalities and Land & Building Taxes for the other parts of the country. The five municipalities are Port-of-Spain, San Fernando, Arima, Point Fortin and Chaguanas.
The national totals of Property Tax paid in the period 1993-2009.
Taking into consideration the drastic negative economic impact of the COVID-19 pandemic, how do you feel about the reintroduction or aggressive laying of the foundation re: valuation log to be completed by November and the pushing of the Revenue Authority Bill at this particular time, is the anxiety level among citizens justified?
Apart from the truism that at any time most tax increases will be opposed, we are now in very trying times in which the very system has been tested at every level–social, economic, medical/scientific, communications. Whether it’s been tested to destruction and how we emerge from all of this remains to be seen. But the reality is that COVID-19 really sharpened certain serious challenges–we have been in decline for about a decade or more. There is tremendous, widespread and well-justified anxiety.
That is the background to the strong opposition and concerns being voiced about the re-introduction of this tax...When the old property taxes ended in 2009, a total of $143M was collected in that year. The current estimates of the property tax to be collected are of the order of $504M, so that is about three-and-a-half times more than what was being paid in 2009.
Ultimately this will be a widely unpopular move at a time of many burning issues, so with only a slim parliamentary majority (PNM 22, UNC 19), that will be a considerable gamble for the Government.
Do you foresee a considerable challenge for the TTRA given the number of citizens against the proposed renewal of property tax?
Despite the range of objections, we need to be clear that the real fear of property tax is rooted in the fact that a modern transparent database will allow our Revenue Authorities (either BIR or TTRA) to see the wider affairs of taxpayers, especially the true levels of rental income earned on investment property, on which income tax is seldom declared, far less collected.
Please offer a perspective on property tax’s place with respect to tax revenue and the T&T Revenue Authority (TTRA).
The Estimates of Revenue disclose that in 1995 property tax was two per cent of tax revenue and in 2009 it was expected to be a mere .18 per cent.
How much revenue on average has the Govt lost over the last 12 years?
That figure has always been underestimated, in my view, but the loss of revenue over that 12-year period would be over $5.50 Billion.
What the are modes of Property Tax?
There are four modes in which property is taxed in a modern system:
Stamp Duty or Transfer Tax–This is the tax paid by the purchaser when acquiring a property. This is the only one of the four types of property tax that is working to some extent. That said, most lucrative property investments are nowadays held in company names so that they can be split and sold by transfers of shares, which attracts a fraction of the stamp duty payable on a sale of the property.
Occupation Tax–This is the tax paid for the length of time one owns or occupies the property and this is the one being revised now. It is called either Land & Building Taxes or House Rates under our laws.
Income Tax on Rental Income–taxes payable on the income received from property rentals. This is poorly monitored at present.
Capital Gains Tax–This is a tax paid on the profits made when the property is sold. CGT is only payable here in the cases of property disposals taking place within 12 months of acquisition. Few vendors dispose of the property within that time limit.
What is your view on the merging of the collection agencies–BIR, Customs, into one unit to facilitate the functioning of the TTRA?
We are here contemplating a widely-discussed public policy shift which is an essential step onto the path of modern and effective Public Financial Management. These combined and crowd-sourced agencies are really the only effective way to tackle some of these big wicked problems, hence the same model was used for the Office of Procurement Regulation, which is also an integral part of modern and effective Public Financial Management. Crowdsourcing refers to the use of whistleblowers since those people are the most valuable source of critical information to stop white-collar crime, as all the research shows.
The Trinidad & Tobago Revenue Authority:
The TTRA was launched in June 2009 and is intended to be a unified body to collect taxes and customs duties. The Board of Inland Revenue and the Customs and Excise Division are to be merged.
Some of the cited benefits of the Revenue Authority model are improved revenue generation and compliance with the country’s revenue laws; better services to taxpayers and traders; a more professional staff complement; improved retention of qualified personnel; and, an improved capacity to deal with corruption. Those are objectives with which I fully agree and the Property Tax review under discussion must be understood as a part of the transition to the TTRA.
Property tax 1993-2009
Up to the start of 1998, the country’s fiscal year-end for national accounting was December 31. There was a transition between 1998 and 2001, with periods to be read as follows ‘1998’ is January 1 to September 30 of that year: ‘1998/1999’ is 12 months ending September 30, 1999, and 1999/2000 being 12 months ending September 30, 2000.
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