Home' Trinidad and Tobago Guardian : May 3rd 2015 Contents Last week, the Sunday BG highlighted
the plight of Wallace, a 32-year-old serv-
iceman looking to purchase a home in west
Trinidad, where he has lived most of his
life. With a salary of $7,000 a month,
Wallace is unlikely to qualify for residen-
tial mortgage in this location.
The Sunday BG also considered the
additional cost a re-instituted property
tax would represent to Wallace and people
This week, we see what are Wallace s
options, whether the tax might be brought
back and under what conditions.
tried to get
west Trinidad and, on his application, he has
indicated his preference for a home in this
location. So far he has had no response. An
HDC house or apartment would represent a
viable option for Wallace in terms of price
and associated costs like property tax. When
he initially checked, an apartment in the Vic-
toria Keyes development, was around
$300,000, well within his reach. But Wallace
is one of 160,000 people on the HDC s waiting
"The government has promised the entire
nation that they are going to give away houses.
It is written that 10 per cent of housing is
supposed to go to national security, firemen,
police, army. But we are not collecting any
houses," said Wallace, "At the end of the day,
we are the people who are doing those public
jobs, policemen, firemen, soldiers and are put-
ting put our lives at risk. The most they could
do is take care of us."
Jearlean John, HDC managing director, con-
firmed that 10 per cent of the national housing
stock is allocated to servicemen. She said
between 2010 and 2015, the available housing
stock amounted to 6,000 homes and 650, or
10.8 per cent, of these are occupied by ser-
vicemen in a mortgage or rental arrangement
with the HDC.
The Sunday BG has learned that HDC prop-
erties, prior to 2009, were also subject to prop-
erty taxes that were less than prevailing rates.
Ingrid Lashley, managing director at TTMF,
told the Sunday BG:
"At the time that the taxes were payable,
they were applied on the basis of the annual
rateable value as defined by an assessment or
valuation provided by the District Revenue
Office or the Board of Inland Revenue.
On this basis, the properties of the HDC
would usually be less than that of the average
middle-income property. It s all based on
To sum up Wallace s situation: he can t
afford a house on the open market or the asso-
ciated property tax should it return. He also
hasn t had luck accessing state housing with
property tax he can afford, should it be rein-
But could the situation be even worse for
A retroactive tax?
So far, the estimates the Sunday BG has
used to calculate property tax were based on
approximations of their current value. Up
until 2009-2010, when collection was sus-
pended, taxes were based on the Land and
Building Taxes Act and pegged to 1948 val-
uations of property. Property values have
gone up significantly since then.
Stephen Kangal who, last week, estimated
his Chaguanas property to currently be worth
$2.5 million, with a monthly rental value of
$7,000 underscores the point.
"My house was built in 1968 and up to
2009, I was still paying the same tax, $32.50"
said Kangal, the $32.50 being based on his
1968 rental value of $300.
Christine Sahadeo, a former PNM senator,
minister in the Ministry of Finance and a
lawyer who specialises in tax matters, admit-
ted part of the problem with the last gov-
ernment s attempt to introduce property tax
reform was the valuation of properties.
"What happened was that it was based on
current valuations. That is what created the
big issue. We have to understand property
values have sky rocketed," said Sahadeo.
Referring to tax based on the 1948 legislation,
she said, "As we all know, it was ridiculously
low. A house worth $2 million, $3 million,
people were paying $300, $500 (in tax)."
An extra layer of confusion is added when
one contemplates what form a reintroduced
property tax could take.
Firstly, no one seems sure whether the
2009 legislation is actually off the books or
Sunday BG research has found that while
Act 18, the Property Tax Act of 2009, was
passed into law, repealing the 1948 Land and
Building Taxes, administrative structures
needed to give the legislation life were not
put into place. Therefore, theoretically, the
2009 Act remains an option for a new gov-
ernment to implement.
Further, the current government has its
own structure for an "industrial" tax,
announced by Finance Minister Larry Howai
during the 2013-2014 Budget. This proposed
a phased introduction of commercial, indus-
trial and residential taxes over the years 2014
It will also have to be decided whether any
reintroduced tax will be charged on annual
rental/rateable value basis or on a capital
The capital value of a property is the price
that property could have been sold at imme-
diately after its evaluation.
At what percentage of the property s value
the hypothetical tax could be applied to is
also another grey area.
Taking all of the above into account, there
is really no way first-time potential home-
owners like Wallace can gauge how much
they need to add to their current savings to
cater for the possibility of a reintroduced
The Sunday BG also raised the issue of the
tax being applied retroactively, something
Kangal said he was concerned about.
However Sahadeo said this was unlikely.
"When you pass legislation, legislation
should not be retroactive. There is a bill in
the budget that allows that, but generally,
you will not want to introduce any legislation
(retroactively). It is not fair because it becomes
How much of a possibility?
But the former senator believes the tax
should be brought back. Sahadeo said the tax
exists in several countries and is utilised for
the good of the communities that pay them.
"Throughout the world, property taxes are
a given. Why is it a given? Because once you
are in a home in a residential area, you would
require certain basic services. Once these serv-
ices have to be provided, it means that those
individuals make some small contribution,"
The trick with the tax is making it equitable
for all stakeholders involved, particularly for
young couples like Wallace and his fiancee,
who have trouble financing homeownership
without the added tax.
"It (the tax) needs to be properly analysed
to make sure that if you are already giving
certain concessions, it is because you recognise
this group will not be able to own a home.
However, they still make a contribution, recog-
nising that with home ownership goes certain
benefits, but also certain costs."
She suggested a phased introduction of the
tax, with gradual increases from year-to-year
and with the proceeds going to the municipal
corporations, who then use them to upgrade
the level of service they provide within their
Sahadeo said this better enables commu-
nities to hold corporations to account when
these services are not up to standard.
Sahadeo was reluctant to provide a per-
centage at which the tax should return and
said, compared to other forms of taxation,
revenue earned from property tax was relatively
low, quoting a figure of $72 million the last
time the tax was collected. She said that given
decreased energy revenues all other sources
of income became increasingly important.
"Things are rough. The price of oil is not
really going back to where it was. Although
we have scoffed in the past and said we really
don t need it, we now have to probably change
the tune and recognise fully that we have to
look at all areas that can be collected and have
to be collected."
MAY 3 • 2015 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
COVER STORY | SBG5
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