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Preparing for the property tax
With a statement, information on its website and with full-page newspaper advertisements, the Ministry of Finance began in earnest the process of collecting taxes from owners of all properties in T&T, signalling a return of this tax after an eight-year hiatus.
It cannot be argued that the property tax regime has not been well telegraphed, as Finance Minister Colm Imbert, in delivering the 2016 budget presentation, proposed to have “a fair and equitable property tax regime in place by January 1, 2016, using the old levels and old rates as a starting point.”
In the 2017 budget, Mr Imbert explained that the Government was unable to collect the property tax in 2016, based on legal advice, but that the tax would be put into full effect in fiscal 2017. Mr Imbert is delivering on a commitment.
It also cannot be argued that the tax is not absolutely necessary, given the fiscal situation the country finds itself in, due mostly to the collapse in the price of oil and the continuing decline in the production of oil and natural gas.
As Mr Imbert said in delivering the 2017 budget, the $16 billion gap between T&T’s total expenditure of $53 billion and its core revenue of $37 billion “must be financed by a combination of borrowings and drawdowns from the Heritage and Stabilisation Fund, and one-off sources of income, such as the sale of assets, dividends from state enterprises, repayment of past lending (i.e. from the Clico bailout) and so on.”
He also said that new sources of sustainable revenue must be identified to “help bridge the gap.”
The implementation of the property tax regime is one of the hard decisions that circumstances have forced the government to make.
And it cannot be argued that the property tax regime that the Government is implementing is not fair and equitable.
The tax is based on the assumption that those with large properties in more affluent neighbourhoods should pay more property tax than those of lesser means living in less salubrious surroundings. It is part of the Government’s attempt to ensure that the burden of adjustment is spread across the society and does not fall only or too hard on the middle-to-lower income salaried households alone.
The property tax regime is also sensitive to the fact that there are hundreds if not thousands of homeowners who are living in homes acquired decades ago that may assessments that would make paying the tax difficult for someone surviving on a pension.
The Property Tax Act allows for a property owner to apply to the Board of Inland Revenue for a deferral of the payment of the assessed tax “on the grounds of the impoverished condition of the owner and his/her inability to improve his financial position significantly by reason of age, impaired health or other special circumstances.”
Included in the information put out by the ministry yesterday is the existence of valuation return forms that all property owners are required to complete and submit to any of the eight offices of the valuation division before May 22.
This appears to be the government’s attempt to allow a measure of self-assessment by property owners, subject to the valuation division conducting a physical assessment of the property and forming its own judgment.
The regime also allows property owners to lodge an objection in writing against the valuation with the office of the Commissioner of Valuations within 30 days of service of the assessment notice.
Property owners are encouraged to give the new system an opportunity to work, while the Ministry of Finance is encouraged to ensure that all questions are answered and that the process of collection is as hassle free as possible.