Home' Trinidad and Tobago Guardian : March 9th 2017 Contents BG6 | NEWS
BUSINESS GUARDIAN guardian.co.tt MARCH 9 • 2017
With Finance Minister
Colm Imbert expect-
ed to update the pop-
ulation on the timing
of the reintroduction
of the property tax
regime during next month's mid-year budget
review, the Institute of Surveyors of T&T
(ISTT) has issued a position paper. In this
paper ISTT argues that for property taxation
to yield the desired revenue, the Government
needs to address the constraints that affect the
ability of the valuation division to collect and
collate values of property across the nation.
Commenting on the proposed reintroduc-
tion of the property tax, released this week,
the ISTT said: "One of the crucial elements
of an efficient property tax regime is the use
of supporting technologies that will make the
identification and management of the hun-
dreds of thousands of properties that need to
be assessed as simple as possible."
The ISTT also highlighted that across the
state machinery, resource constraints could
prove to be a real challenge in the completion
of the valuation exercises need before the tax
could be applied.
The body stated: "As is commonly evident
throughout the entire public service, the hu-
man resource and psychical accommodation
elements that presently confine the valuation
division in its ability to execute the massive
data collection exercise required for building
the valuation roll need to be critically exam-
ined and given due attention.
"The success of the re-installment of any
system of property tax for T&T is largely de-
pendent on the production of the valuation
roll since this forms the basis from which the
tax will be derived."
Need the money
For the last two election cycles, the intro-
duction of the property tax regime has been
one of the more contentious issues grip-
ping those seeking office and among those
who would elect them, with Opposition MP,
Prakash Ramadar leading an Axe the Tax cam-
paign in late 2009 and 2010.
Indeed, in the midst of all the political jos-
tling, what the property tax is---and is not---
has become the subject of much rumour and
speculation, with the wider public seeming-
ly bewildered as to how this proposed fiscal
measure will affect them.
What is certain, is that with government
revenues having declined significantly as a
result of falling oil and gas prices since mid-
2014, and with the need to fulfill its expendi-
ture obligations, generating additional revenue
through taxation (and also reducing expend-
iture in certain areas) has become the order
of the day.
In his 2017 budget, along with various forms
of subsidy reduction, Minister Imbert intro-
duced two new tax initiatives: the seven per
cent online purchase tax (OPT) which took
effect in October 2016, and the 30 per cent
tax on high-income earners (individuals and
companies with chargeable income/profits
exceeding $1 million) commencing January
The minister also reiterated, for the second
consecutive year, his intention to reintroduce
the property tax in 2017.
T&T remains one of a few countries in the
world not collecting property tax which the
Finance Minister has deemed "the most eq-
uitable of taxes."
Crude estimates suggest that the Govern-
ment has been forgoing roughly $200 million a
year in property tax payments. Given its fiscal
position, it appears the State can ill afford to
do without such much-needed tax revenue.
Property Tax Act 2009
Enacted in 2009, the Property Tax Act was
intended to replace the Lands and Buildings
Taxes Act in place since 1920, and last amend-
ed in 2007.
The Property Tax Act is divided into seven
parts and contains 57 clauses, all detailing
various property-specific issues.
According to the act, the Board of Inland
Revenue (BIR) is charged with the creation
of an "assessment roll" which effectively de-
termines the classification and valuation of
land, and the applicable deductions, allow-
ances and tax rates to be levied with respect
to that property.
The act states that tax is to be calculat-
ed based on the annual rental value (what a
landowner would fetch should the property
be put on the market for rent---rental income)
less 10 per cent to allow for periods when the
property is not rented or the landlord does
not collect rent.
The rate of taxes are then applied such that:
• Residential property is taxed at a rate of
three per cent,
• Commercial property is taxed at a rate of
five per cent,
• Industrial property is taxed at a rate of
six per cent and
• Agricultural property is taxed at a rate of
one per cent.
On vacant land, the rates applicable are:
• Residential taxed at 3.5 per cent,
• Commercial taxed at five per cent,
• Industrial taxed at five per cent, and
• Agriculture taxed at two per cent.
The act also clearly lists properties that
would be exempt from the tax such as: church-
es and places of worship, school compounds
and playgrounds, property used for charita-
ble and philanthropic work, land occupied by
state enterprises, public hospital facilities and
university and tertiary education facilities.
Of note, the act includes a section that
clearly defines the conditions and procedures
necessary for objections, revaluations, relief
and appeals. This area is of particular interest
given the outcry by certain segments of the
population that have suggested a possible
inability to pay the tax.
Clause 23 (1) of the act states: "The board
may, upon the application of the owner of land,
authorise the deferral of the payment of the
assessed tax on the land on the grounds of the
impoverished condition of the owner and his
inability to improve his financial position sig-
nificantly by reason of age, impaired health or
other special circumstances, that undue hard-
ship to that owner would otherwise ensue."
A tax scenario
A quick glance through any daily newspa-
per provides ample material for calculating a
likely---albeit crude---property tax scenario.
Looking at the requested rents for prop-
erties across the country, a reasonably solid
---though not absolutely factual---conclusion
about land and property values in certain areas
and the associated tax estimates can be made.
For example, a three-bedroom apartment
in Cascade demanding US$2,500 per month
(US$1 = TT$6.78) would translate into an an-
nual rental value of roughly $203,400 ($2,500
x 6.78 x 12).
Taking the 10 per cent deduction, the
taxable value now becomes $183,060. The
homeowner (not the tenant) is now liable to
a tax rate of three per cent of this value. This
translates to $5,491.80 for the year, or $457.65
in tax payment per month.
The same process would be applied to com-
mercial, industrial and agricultural properties,
only adjusting for their respective tax rates.
The argument can be made that someone
owning property that can command such a
value in rent should be in a position to meet
their property tax obligation.
As stated, this is an arbitrary example but
the construction of the tax and costs to be
incurred can be easily distilled.
The simplicity of the above example belies
some challenges inherent in reintroducing the
1. Until sufficient information is presented
about the valuations being applied, and how
the Government is getting its assessment roll
data, it is difficult to assess the reasonableness
of the tax. Once those valuations are made
public, more specificity in the application of
the tax can be understood.
One of the more obvious places for the BIR
(and valuation division of the Ministry of Fi-
nance) to look and indeed cooperate would be
with the Ministry of Legal Affairs and its reg-
istry department. A look at deeds and mort-
gages being registered, now and historically,
(as is mandated by law) should be indicative
of the evolving property values over time in
different areas of T&T.
2. Another important consideration involves
examining the role of the Rent Assessment
Board. Not much has been said about whether
that body would play a role in the reintroduc-
tion of the tax.
The board would have some responsibility
in ensuring that those who are renting prop-
erty are not unfairly treated by landlords upon
whom the tax burden falls.
3. Finally, how those who perceive them-
selves to be unable to meet the tax burden
are to be handled remains unclear. Certainly
the act does make provisions for exemption
based on certain criteria, but the mechanism
for assessing the validity of those seeking such
exemptions remains a matter to be detailed
Property tax of $457.65/month
Three-bedroom Cascade apartment could pay
A view of St Ann's and Cascade from Lady Chancellor Road.
PHOTO: ROBERTO CODALLO
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