Home' Trinidad and Tobago Guardian : May 18th 2017 Contents MAY 18 • 2017 guardian.co.tt BUSINESS GUARDIAN
VERBATIM | BG11
One feature about the property
tax that is igniting such op-
position is that the resultant
bill is potentially too high.
One per cent of someone's
idea about how much rent
could possibly be paid if the property were
rented, even if discounted to 90 per cent, can
easily lead to an extraordinarily high bill which
comes after eight years of paying nothing. You
know how people get accustomed to spending
all the money they get leaving nothing for any
'new' tax. Its just too much of a jump. If the
tax were introduced gently at a smaller figure
and raised over 3 year to the desired level there
would be less complaint.
Also in times of falling rental rates (as per-
tains now) the risk of paying tax on an over-
valuation, that we will have to live with, in the
years it takes to have a revaluation, would be
The PNM should be particularly careful
about this since they managed to get them-
selves voted out of office in 2010 for many rea-
sons including the threat of a large increase
in property tax together with all the bluster
and cosmetics about some Revenue Author-
ity which just looks like more expense to the
nation. And all this opposition despite the fact
that most people accept the need to pay some
sort of property tax.
My own feelings about the tax are as follows:
1.The tax is rooted in some theory that
the rental value is some sort of benefit
to the owner. If someone rents their house
and derives revenue from it they are entitled
to deduct expenses before paying income tax.
In the case of townhouse, flats, and community
developments there is an associated service
charge written into the lease and hence not
optional, plus any other expense the owner
incurs which are deductible. There is no similar
provision in the property tax which assumes
the rental value is somehow obtained gross.
Some service charges are as high as $10,000
per month even when the flat stands empty
earning no revenue. Landlords are already re-
quired to pay income tax on the rents they get.
Owners who live in their own houses get no
revenue and are not entitled to claim expenses
so suffer even worse. This is all patently unfair.
2.Years ago developers and property
owners were incentivised to put more
property on the market with tax holidays on
properties provided the construction cost of
the property was below some level. Rental rates
are generally well below mortgage payments
required on the same property so this measure
puts more affordable property into the market.
This is a far more efficient policy than the HDC
formula which results in 70 to 80 per cent of
occupiers defaulting on their payments and
solves no problems.
Landlords actually assist with the housing
problem but nowadays are branded as horrible
creatures extorting money from tenants so are
regarded as sources of money on which the
state must prey.
3.There is no provision for discouraging
squatters or removing them. Probably
most squatting is on state land on which there
is no property tax, and private land owners will
have to continue to gaze in dismay as these land
thieves invade and steal their property. I do
not believe governmentt assurances that they
will assess and tax squatters. I do not accept
that a squatter who somehow pays a property
tax (probably unbeknown to the land owner)
enhances his claim to ownership of the land.
This should be actively discouraged.
4.I see no provision for unbuilt land. Im-
agine an empty lot next to your house
earning nothing. It can't be used for agriculture
because of the lease covenants. Neither can it
be used for any commercial or industrial use,
so I guess the rental value is zero and you pay
no property tax?
5.Similarly, the case of agricultural land is
shrouded in vagary. Since agriculture is
basically uneconomic in T&T due to the lack of
protection by the state from praedial larceny,
and lousy labour productivity born from years
of government anti-productivity schemes such
as CEPEP, is the number upon which the one
per cent is to be applied to, actually zero?
Remember, again, that farmers are already
required to pay income tax on any profits they
are lucky enough to earn, and the government
is supposed to be encouraging agriculture.
6.There has been no mention of an am-
nesty on land and building tax penal-
ties. Normally when one tax replaces another,
an amnesty is allowed on arrears penalties on
the old tax. This has the effect of encouraging
payment of the outstanding amount and saves
endless litigation to capture the penalties on
a tax that no longer exists.
I would like to support the excellent idea
from Johnny Cash in San Fernando where he
advocated collection of Property tax via the
T&TEC meter. The "tax" would be an addition
to the bill and would be in direct proportion
to the electricity used.
As the letter writer pointed out, the infra-
structure is already in place for this. It simply
requires a small modification to the software
handling bills and, if you don't pay, you get
cut off. No need for that large valuation staff
and thousands of hours of work.
Since T&TEC now illegally connects squat-
ters to their supply, money can be extracted
from squatters on private and state lands with-
out presenting anything that could be misused
as a claim to the land. I would suggest also
that a "no deed" penalty be included in the
bill to squatters. All that is required is a simple
agreement with T&TEC to separate the "tax"
from the electricity payments.
I would further suggest that the government
allow T&TEC to keep the "tax" money and use
this to repay NGC for the $3.5 billion they owe
for gas fuel supplied which, of course, has been
funded by the State. This mechanism will avoid
the monies entering the general fund where it
usually disappears from view.
It seems to me there are a great number of
problems out there, growing in size and seri-
ousness, and introduction of this tax should
be an opportunity to solve as many as possible
without introducing new ones.
Why T&T needs
and better ways to introduce it
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