In his testimony at the Hindu Credit Union hearings, auditor Madan Ramnarine was very clear about property ownership. Such assets are beneficial only in the long haul. Financed with borrowed capital they are early loss makers. That a person may own several properties and be thought to be rich as (trade unionist) Watson Duke promotes, is dangerously fallacious. Ownership of multi-properties often means investment of long-term funds at commercial interest rates, facing maintenance costs and undulating market values, along with increasing water rates and nominal (so far) property taxes.
Such investments rely on accrued rentals, which until recently were controlled, and the single benefit finally comes from property appreciation, which is only realisable upon sale ending investment and income.
Where folk own expensive properties through appreciation over the years, they usually came by them through inheritance, and maintenance costs often become prohibitive. Such properties facing enhanced property taxation would often face being sold because of inability to pay by present owners. In the case of folk who have been able to build or acquire their residences within their lifetime, the realities are that such properties were acquired if built by paying VAT on all material and interest on all loans and financing charges, plus insurance against fire, flood and earthquake damage. Property taxation, therefore, applies to VAT already paid and all expenses met to acquire. Where folk purchase properties, substantial stamp duty would also attract compounded repeat levies of property tax in addition to all costs that went into original construction including VAT and other government levies.
In short, property tax is a virtual capital gains tax which no longer applies in normal course, as well as a compounding of tax upon taxes already paid. It is a tax on non-monetised wealth. In his targeting the “rich,” Duke should look at corporate tax paid by obscenely profitable banks at the lowest rates in common with workers. Indeed, many countries do not levy income tax and such a relief will empower workers across the board. Currency control of various types deal with money for government internal spending. Foreign exchange always has to be earned. Duke has based his recommendations upon a fallacy. In closing, I must state that I own no property and there is no conflict of interest involved, lest this note be seen as self-serving.