“As cer­tain as death and tax­es” is a phrase which is gen­er­al­ly cred­it­ed to Ben­jamin Franklin, but seems to have been used much ear­li­er by Daniel De Foe and Christo­pher Bul­lock in the 18th cen­tu­ry.

The phrase re­flects the un­der­stand­ing that the State has the pow­er to im­pose tax­es which al­lows them to pro­vide pub­lic goods such as roads, pub­lic trans­port, po­lice, the ju­di­cial sys­tem and oth­er ser­vices that fa­cil­i­tate a mod­ern so­ci­ety. Whilst every­one may ben­e­fit from these pub­lic goods there is no easy way to cal­cu­late how much of these ser­vices any one per­son may con­sume. Ac­cord­ing­ly, the sys­tem is de­signed to en­sure every­one con­tributes ac­cord­ing to their means. This type of tax is called a pro­gres­sive tax, mean­ing that the more you earn the more you pay. The prop­er­ty tax be­cause it is based on the an­nu­al rentable val­ue could be said to be a pro­gres­sive tax. Sales tax and Val­ue Added Tax are re­gres­sive tax­es as they are as­sessed re­gard­less of in­come. That means high and low-in­come earn­ers pay the same tax with low-in­come earn­ers pay­ing pro­por­tion­al­ly more.

Most peo­ple would not will­ing­ly pay tax­es. Peo­ple ques­tion the ef­fi­cien­cy of gov­ern­ment ex­pen­di­tures or ar­gue that those ex­pen­di­tures do not ben­e­fit them di­rect­ly. Giv­en this pre­sumed re­luc­tance, the tax leg­is­la­tion gives gov­ern­ments very wide pow­ers of en­force­ment, hence the phrase as cer­tain as death and tax­es, mean­ing that tax­es can­not be avoid­ed. There­fore, an ef­fi­cient tax is easy to col­lect and eas­i­ly un­der­stood by the tax­pay­er. The idea is that if it is eas­i­ly un­der­stood, a tax­pay­er would be more will­ing to pay.

The idea be­hind the prop­er­ty tax, an­nu­al rentable val­ue or the rent that a prop­er­ty could at­tract in an open mar­ket, seems easy enough in prin­ci­ple. This is a no-brain­er if the prop­er­ty is rent­ed, but more dif­fi­cult if the prop­er­ty is own­er-oc­cu­pied. The ad­di­tion­al com­pli­ca­tion is that in the T&T mar­ket, few hous­es are iden­ti­cal and peo­ple place great em­pha­sis on dif­fer­en­ti­at­ing their prop­er­ties from their neigh­bours.

The ini­tial de­sign of the prop­er­ty tax sys­tem was meant to al­low prop­er­ty own­ers the abil­i­ty to com­pare their tax­es with neigh­bours or with tax­es in oth­er ar­eas. Be­cause the ba­sis of cal­cu­la­tion is new, there will be some re­sis­tance. This has not been helped by how the tax has been rolled out. Many prop­er­ties have nev­er been vis­it­ed. Some prop­er­ties that were not vis­it­ed al­so did not re­ceive no­tices of their an­nu­al rentable val­ue, while some re­ceived as­sess­ment no­tices.

Some own­ers of va­cant lots in res­i­den­tial ar­eas have not re­ceived ei­ther a no­tice of an­nu­al rentable val­ue or a no­tice of as­sess­ment. Ex­tend­ing the time to ob­ject is there­fore moot. The fi­nance min­is­ter has been very par­si­mo­nious with in­for­ma­tion on the im­ple­men­ta­tion of the prop­er­ty tax.

How many as­sess­ments have been made rel­a­tive to the num­ber of hered­i­ta­ments? How many are own­er oc­cu­pied and how many are rent­ed? How were the rentable val­ues on own­er-oc­cu­pied prop­er­ties cal­cu­lat­ed and with ref­er­ence to what val­ues? How were these rents de­ter­mined?

In­stead, the min­is­ter has re­ferred to the pow­er of min­is­ters to vary rates uni­lat­er­al­ly in oth­er ju­ris­dic­tions. The un­der­ly­ing pre­sump­tion is that tax­pay­ers did not de­serve an ex­pla­na­tion. Fur­ther, al­though he has ex­tend­ed the time to ob­ject, the ad­ju­di­ca­tion tri­bunal will not be es­tab­lished for an­oth­er six to nine months. This means that the ob­jec­tion process is com­pro­mised and every­one will have to pay the tax as as­sessed.

If an ob­jec­tion is suc­cess­ful, one sup­pos­es the ob­jec­tor should re­ceive a re­fund. The min­istry’s rep­u­ta­tion for pay­ing re­funds is not a bank­able propo­si­tion. In re­spond­ing to a ques­tion by the Op­po­si­tion in the Sen­ate last week, the min­is­ter not­ed that VAT re­funds amount­ed to $6.54 bil­lion on Jan­u­ary 31, 2024, a net re­duc­tion from the $7.15 bil­lion due on the same date in 2020. He al­so re­port­ed that the one per cent penal­ty in­ter­est (payable on VAT re­funds un­paid for six months) in 2023 amount­ed to $2.235 bil­lion. (Ex­press 26/3/24). Per­haps the re­porter made an er­ror as the in­ter­est pay­ment for one year is as­tro­nom­i­cal by any stan­dard.

 Un­paid VAT re­funds at $6.54 bil­lion amount to three to five per cent of the cur­rent nom­i­nal GDP, a sub­stan­tial num­ber which is af­fect­ing many busi­ness­es neg­a­tive­ly as it de­prives them of cash flow.

When ques­tioned on the re­pay­ment of the amounts out­stand­ing us­ing the mech­a­nism of VAT bonds, the min­is­ter re­spond­ed that “if it is deemed ap­pro­pri­ate by Gov­ern­ment, we will do so but that de­ci­sion has not been made.” A quick check of sev­er­al ran­dom busi­ness­es in dif­fer­ent sec­tors in­di­cat­ed that each firm is owed mil­lions. The UWI Arthur Lok Jack Glob­al School of Busi­ness did re­ceive VAT bonds in the past, but those bonds did not re­pay all the VAT re­funds due at the time.

Cur­rent­ly, the fig­ure owed by Gov­ern­ment is over $5 mil­lion dat­ing back to 2012. Every busi­ness must man­age its cash flow close­ly es­pe­cial­ly in dif­fi­cult times and these are dif­fi­cult times. All busi­ness sys­tems are built on trust; trust that firms will pay their bills in a rea­son­able time. When a gov­ern­ment does not up­hold the law by meet­ing its tax oblig­a­tions, it un­der­mines the ba­sis of the tax­a­tion sys­tem and the le­git­i­ma­cy of the com­mer­cial sys­tem on which any econ­o­my is based.