THE TT Chamber of Commerce has called for more clarity on the means and measures which will be used to implement the property tax, announced in the 2020/2021 budget on Monday.
The move was discussed by a panel including executive director of Associated Brands Nicholas Lok Jack; CEO of the Ansa McAl Group of Companies Anthony Sabga III; Southern Sales Ltd director Reyaz Ahamad; UWI economics lecturer Dr Marlene Attzs; and economist Marla Dukharan.
They said while Finance Minister Colm Imbert promised that the tax would be “fair and reasonable and would not present an onerous burden,” there was still uncertainty about how the tax value of a property would be determined for each class, and that has left the business community with a level of uncertainty.
Wade George, executive chairman of Ernst and Young Caribbean, in his presentation, pointed out that for the business community the real confusion comes when the taxman comes knocking on the doors of commercial, industrial and agricultural properties.
Lok Jack said the uncertainty about what the actual tax would be was counterproductive to the goal of promoting public-private partnerships, as it would deter businesses’ decisions to invest.
“The uncertainty that it creates is not good,” Sabga added. “It is not such an attractive situation with plants.”
He said ultimately, what was needed was a widening of the tax net, rather than piling more taxes on one sector of society.
The closest indicator to how the rate of the tax would be determined is the 2009 Property Tax and Valuation of Land acts, which were supposed to come into operation since 2010, but a moratorium was placed on the tax since it was proclaimed.
According to the law, the property tax is determined by the annual tax value (ATV) of different categories of property. The tax rate is a percentage of the ATV.
For the residential class the rate of tax was three per cent with the ATV being determined as 90 per cent of the annual rental income expected to be earned from the property. For vacant land the ATV would be equal to 3.5 per cent of the capital value of the property, less any applicable deductions and allowances.
For the commercial class, the rate of tax was five per cent, and the ATV was 90 per cent of the annual rental income. For vacant land the ATV was five per cent of the capital value of the property.
For industrial properties the tax rate was six per cent for properties with machinery housed in the building, and three per cent for properties with no machinery. The ATV was determined by the plant and machinery, whether it was housed in the building or not. For vacant land the ATV of industrial properties was determined as five per cent of the capital value.
For agricultural lands and properties the tax rate was one per cent, with the ATV being two per cent of the open-market capital value of the land or property, and for vacant land two per cent of the market capital value of the land and any agricultural buildings there.
Agricultural land was earmarked as one of the classes of properties which would be last to be taxed.
In the budget presentation, Imbert said “We have already decided to make agriculture in all its facets a tax-free industry.”
George suggested that since the ATV was an intrinsic part of the computation of the property tax, some guidance should be given, through legislation or formal policy, to provide clarity to taxpayers.