Property tax won’t promote commercial use

THE EDITOR: I refer to the news story headed “Property tax could encourage commercial use” in the September 29 Newsday.

Scotiabank’s senior investment manager opined that implementation of the tax will bring about commercial development of property.

According to the manager, “Attaching a small cost to ownership would help redistribute the resources...to people who in the end would make the best use of them.” He concluded “that would be in the national interest.”

The promise of unimproved site value taxation, with which we flirted for 33 years, was that at high rates of tax it would induce development. This could not be done by the rental value basis which we have been on since 1844.

That was the hypothesis. The reality is that development only takes place when it is deemed profitable to do.

Research has debunked this hypothesis. One such study was by Daniel M Holland entitled “A Study of Land Taxation in Jamaica” (1969).

Holland concluded that “development is a product of numerous factors.” He listed the factors as demand for construction, availability of finance, foreign exchange for equipment, furnishings and skills.

Also, how could it be in the national interest for the State to coerce owners to sell their properties to the people with deep pockets? This would concentrate property ownership in a very small segment of the population.

We have experience with property taxation of 237 years and can do better.

RAY PIERRE

via e-mail