Last week Wednesday night, the Valuation of Land (Amendment) Bill 2023 was voted on, and approved, by a 18 to 14 majority in the House of Representatives, bringing T&T one step closer to the reintroduction of a tax on property, which was stopped in 2009.
With reference to the property tax, it is an historical fact that the axe-the-tax campaign of 2009 and 2010 contributed to the People’s National Movement administration being voted out of office following the May 24, 2010 general election.
The Congress of the People (COP)–one unit of the People’s Partnership coalition that formed the Government after the 2010 general elections–initiated and led the “axe-the-tax” campaign, which was adopted as policy by the administration led by Kamla Persad-Bissessar.
As a result, in the first budget presentation after the 2010 general election, then Minister of Finance, Winston Dookeran, who founded the COP, fulfilled the 2010 election campaign promise by axing the property tax.
“The property tax will be replaced by the old lands and building taxes regime at the old rates and old values. There will be a waiver of lands and buildings tax for the year 2010,” said Mr Dookeran, in delivering the 2011 budget on September 8, 2010.
Last Friday, the T&T Chamber of Industry and Commerce issued a news release in which it expressed concern about the timing of the implementation of the property tax on the citizens and businesses of T&T.
Following is the T&T Chamber’s statement in full:
“While the Trinidad and Tobago Chamber of Industry and Commerce understands the need for the implementation of property tax, it notes with concern the financial impact that it may have on citizens at this time.
“We are aware that the revenue generated from the property tax is a necessity to pay for services and operations of the local government bodies and hope that it is executed in an equitable manner based on the criteria laid out for charges to be applied to properties.
“The timing, however, is an issue as consumers have been hit by increases in costs and to institute an additional cost on homeowners would make it difficult for them to meet their existing commitments.
“The T&T Chamber further hopes that it does not deter business owners from maintaining their companies’ plant and machinery as well as updating their infrastructure to industry related best practices. We have in the past called for a revision of the six per cent tax on industrial properties to apply strictly to physical property and not install cost of plant, machinery, and equipment inside or outside.
“We also maintain the view that introducing a top-line tax on businesses’ revenues may be a disincentive for further investment in a time when the emphasis is to create an enabling environment for business growth and so have a ripple effect of less taxable opportunities for government.
“To this regard, T&T Chamber looks forward to working with the relevant stakeholders and the Ministry of Finance to find a solution to this matter.”
Timing of the tax
The T&T Chamber is particularly concerned about the timing of the introduction of the new property tax regime.
So, T&T Chamber, which was established in March 1879 to lobby on behalf of its members’ interests, states that while it understands the need for the property tax “it notes with concern the financial impact that it may have on citizens at this time.”
The T&T Chamber also stated: “The timing, however, is an issue as consumers have been hit by increases in costs and to institute an additional cost on homeowners would make it difficult for them to meet their existing commitments.”
It seems to me, therefore, that T&T’s premier business organisation has changed the axe-the-tax campaign to make it a call to axe-the-tax-now.
I have some questions for the T&T Chamber:
1. If the timing of the reintroduction of the property tax “would make it difficult” for homeowners “to meet their existing commitments,” what is the business lobbying group’s view on when would be a better time to implement the tax?
Asked in the alternative, what is it that makes now a bad time to implement a tax that has been deferred for 14 years, given that the elimination of most of the COVID-19 restrictions took place a year ago?
Would the introduction of the property tax in 2010 have come at a better time than in 2023?
2. Is it the T&T Chamber’s view that the tax on residential properties should be delayed until the economy improves, when more people are employed, or when the Dragon field or Woodside Energy’s Calypso natural gas field go into production?
Would the financial impact on citizens “at this time” be greater than in four years from now?
3. Is the T&T Chamber aware that the new regime is a progressive tax, meaning that those who are wealthier and have larger, more lavish properties are supposed to pay a higher tax than those who live in smaller, more modest accommodations?
Does the business group object to the progressive nature of the tax?
4. Is the T&T Chamber aware that the new property tax regime allows homeowners, who have been assessed as having a property tax liability, to apply to the Board of Inland Revenue for a deferral of the tax “on the grounds of the impoverished condition of the owner and his inability to improve his financial position significantly by reason of age, impaired health or other special circumstances, that undue hardship to that owner would otherwise ensue.” (See section 23 (1) of the Property Tax Act)
Is the T&T Chamber aware that applications for deferral shall be made on the prescribed form and shall be accompanied by evidence that the applicant is in receipt from the State of:
• A public assistance grant
• A disability grant;
• A senior citizen pension;
• A T&T conditional cash transfer card; or
• Does not receive an annual income exceeding the maximum amount specified in section 3 of the Senior Citizens’ Pension Act (which I believe is now $3,000 a month).
5. Is the T&T Chamber aware that the number of people receiving social grants from the T&T Government (including public assistance, disability, food support and senior citizens pension) is 175,000, according to Minister of Finance, Colm Imbert, in his 2023 budget presentation.
Is the Chamber aware that the 175,000 people receiving social grants is equal to 16.13 per cent of the T&T population over 14?
By the way, and for context, Government spends $5.4 billion per year on social grants, including senior citizens pension at $4.3 billion, food support at $175 million, disability grants at $630 million and social assistance grants at $355 million, according to the 2023 budget speech. Social assistance grants account for about 10 per cent of T&T’s total expenditure.
So, if 175,000 people in this country receive social grants from the Government, and the Property Tax Act allows each of them to apply for a deferral of their property tax, who are these homeowners for whom the introduction of the new property tax regime “would make it difficult for them to meet their existing commitments?”
Is it the teachers, soldiers, fire officers and others in the public service, whose unions have agreed, or will agree, to the 4 per cent wage increase offered by the Government and who, as a result, are due to receive backpay?
6. If the T&T Chamber is concerned that “consumers have been hit by increases in costs,” can it appeal to its members, who are involved in supermarket and grocery trade, to consider rolling back some of their price increases as a result of the global reduction in the cost of shipping?
7. Finally, I am interested in finding out from the T&T Chamber to what extent is the introduction of a top-line tax on the revenue of businesses a disincentive for further investment? Does this pertain to manufacturers or to retailers and does T&T need more investment in retail?