Prakash Ramadhar, political leader for the Congress of the People (COP) said 2016 will be difficult on all fronts and the return of the controversial Property Tax will only make the country’s situation worse.
He said the COP does not believe in redistributive policies but in wealth creation.
“This year ahead of us from all indications will be a challenging one. Not just in relations to the upsurge in crime we have seen recently but the uncertainty of our economic future and the measures that have been indicated by our Government to deal with the financial and economic shortfalls. We have seen now that the tax whatever form of valuations they use, will go to the national consolidated fund, and not to the regional corporations that the tax should go to,” he said.
Ramadhar spoke to the media yesterday at a media conference at COP’s Operations Centre, Charlieville.
In 2009 the Property Tax Act was passed by the Patrick Manning Government but was never implemented and in 2011 it was suspended by the People’s Partnership Government. That tax had replaced the Land and Buildings Tax.
The Keith Rowley Government is to return to the tax, to offset the revenue shortfall from low oil prices.
Ramadhar said in 2009 the COP led a charge against the then Government against the implementation of the Property Tax and now it appears to have returned.
He spoke about “uncertainties” on what the Government meant by the return of this tax.
Clyde Weatherhead, COP’s General Secretary who also spoke at the media briefing, said the Government is not clear about what type of tax will return as in the October budget the Finance Minister indicated that the Property Tax is to be “phased back in” in 2016 at the “old rate and value.”
He also referred to the Prime Minister’s speech at the end of December when Rowley spoke about a Land and Buildings Tax which would be introduced in January 2016.
“Land and Buildings Taxes no longer exist, and the basis on which they were calculated is completely different from that of the Property Tax. So you cannot amend the Property Tax Act to recreate the Land and Building Tax. So it is unclear what the Government is saying. There needs to be clarity on what is the basis for valuation,” Weatherhead said.
He said the Land and Buildings Taxes represented two different taxes, one on land and the other part on buildings.
He added that if in 2009 a person with two acres of land paid $20 on land taxes, in 2016, based on the Property Tax Act of 2009, the owner would pay over $1,000.
“So for a three bedroom house if you use capital value which will be about a million dollars, the Property Tax in 2016 which would be three per cent of that will be $30,000. The rate is three per cent on residential properties, five per cent on commercial property, six per cent on industrial property and one per cent on agricultural land,” he said.
He said the COP will be going to different communities in the country to explain the ramifications of the Property Tax especially in light of the possible rise in prices in gas, water, electricity and food in 2016.
“With all of this, can we deal with a Property Tax that be based on capital value and increase our taxes tremendously? We need to educate the population.”
Explaining property tax
The Property Tax Act of 2009, introduced by the then PNM Government was an act designed to make provision for the assessment, rating and taxation of land and property.
The Act was supposed to have been the basis of a complete revision of the country’s property tax system, insofar as the old Land and Building Taxes and House Rates were concerned.
The new Government has not yet provided any details on how a revised Property Tax will work.
However, using the capital value, if an owner has a three bedroom house worth one million dollars, based on the three per cent rate, the tax the owner would pay would work out to be $30,000 in 2016.
At a rate of one per cent, if someone owns agricultural land worth $750,000, the owner would pay taxes of $7,500.
At a rate of five per cent, if someone owns commercial property of $1,000,000, the owner would pay taxes of $50,000.
The taxes that property owners would pay, would work out to be much higher than the old Land and Building Taxes Act.