After more than a decade of heated debate, the Valuation of Land (Amendment) Bill, 2023 was passed in the Lower House on Wednesday night, bringing TT closer to the resumption of tax payments on properties.
The bill was passed 18-14 in the House of Representatives, with the Opposition voting as a bloc against it.
Government used the pandemic years to gather valuation forms for residential properties. It needed 50 per cent of an estimated 400,000 residential homeowners to voluntarily complete these forms to trigger collection under the Property Tax Act. The estimate of properties was calculated based on TTEC electricity connections. The first effort to gather valuation forms ran until 2018, when the process was challenged legally after 127,000 forms were completed.
By Wednesday, 232,000 valuations had been submitted to the Government. Homeowners can expect to pay more than the peppercorn rates that were the norm for properties until 2009.
These payments that were set decades ago weren't revised to keep pace with the changing economy, the purchasing power of the dollar or the dramatic rise in the value of the properties themselves.
The new rate is three per cent of the rental value of a residential home. The Commissioner of Valuations, appointed under the new act, will assign an annual rental value for each property. Homeowners are likely to raise an eyebrow at the Finance Minister's sweeping assurances that it would be easy to determine the rental value of their properties, suggesting the possibility of computer-assisted mass appraisals and sample-based evaluations.
Business chambers repeated their concerns about the inclusion of plant and machinery – subject to depreciation in value – in commercial valuations. The money raised through the new property tax regime will create a new revenue stream to support strengthened municipal corporations, bringing real capacity to constituencies and greater responsibilities for mayors, councillors and aldermen.
Government's ambition to reform the structure of local governance is sensible, given its spotty past performance and the dramatic changes that this new revenue stream will bring over the next few years.
But Government now doesn't have the time it hoped for to effect local government reform. The Privy Council's ruling that Government was wrong to extend the term of councillors and aldermen for a year demands an effective response, and one is expected in Parliament on May 30.
The Opposition is correct to note that the status of local government after the ruling is untidy at best and illegal at worst. Six months short of the year it hoped to use to bring change to local government, the PNM will have to return to the polls.
Government must therefore prioritise systems that bring improved levels of transparency in the use of property tax revenue to improve the commons of community infrastructure and commit to reporting publicly on the spending by municipal authorities.