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Property tax vital but will it be fair?

Friday, May 19 2017

THE EDITOR: The property tax is long overdue. There are few countries anywhere in the world in which property owners are not subject to property tax. However, those who are required to pay the tax must have at their fingertips the rationale for the tax and exactly how the proceeds will be utilised in the provision of services to the community.

The delineation of the respective services that would be provided to burgesses of the corporations is necessary at the outset.

Central government must outline exactly what percentage of the property tax is to be given to the municipal corporations — to provide services such as road and sidewalk repair, waste collection, public healthcare, utilities and other necessary services.

In fact, the tax should be collected by the municipal corporations and an agreed-upon percentage can then be passed to central government. The tax must not become part of the Consolidated Fund to be redistributed as felt by central government. Instead, the proceeds of this tax must be the basis and financial strength of the promised local government reform.

The other critical aspect of the property tax is the determination of the rate by which properties will be assessed. The information from the Valuation Division of the Ministry of Finance points to annual rental value as the basis for the calculation of the quantum of tax to be paid by a property owner. However, rental value is based on what set of parameters? The following parameters may be considered relevant in the context of arriving at the monthly rate of rental — location, amenities such as reliable water and electrical supply, proper roads, safety, size of dwelling, internal amenities (eg hot water, air condition, Internet etc) and accessibility.

The question can then be asked: How is equity achieved for taxpayers living in different communities but are placing a rental value on a dwelling of the same size and equal amenities? Therefore, what parameter will be used to establish the true rate without prejudice to either owner? The Valuation Division must be aware that in present-day TT , location is a major determinant in the rate of rent charged.

Consequently, those who reside in perceived “better neighbourhoods” will bear a heavier burden based on the quantum of the assessed property tax.

The ARV may also be contentious where an older house has been modernised for the benefit of the occupants over years of investment and mortgage payments.

This property will attract a higher rental value and by extension property tax. How residents of these properties are impacted by the tax, in particular retirees in occupancy, could be a concern.

Finally, the Government needs to embark on a public education programme that would provide the population with a better understanding of the property tax and its true purpose. In TT the use of the proceeds of special taxes (road tax and health surcharge) have been utilised for purposes other than that for which the taxes are collected.

The consequences of the improper application have redounded to continued poor roads and health facilities/services. Therefore, we the people must demand that the Government enacts a law that assigns the collection and use of the property tax to the municipal corporations.

ALBAN C SCOTT Woodbrook, PoS

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