Property tax: Getting the facts right

DIANA MAHABIR-WYATT

I am confused. I tried to accept the logic of the Finance Minister when he assured us that there is a lot of fake news on the subject of property tax, and I believed him, so I spent most of last weekend with a neighbour, hunched over a computer, trying to sort out true from fake news.

Since this is a business column, intended for public information, we decided to trace the path any member of the reading public would take, by finding how much the property tax will come to for a typical small and medium-sized enterprise (SME) business property. Since most neighbourhoods include domestic and commercial properties, we thought that appropriate.

On the Finance Ministry's website, we searched for "tax payable on commercial property," since we both remembered a couple of years ago it had been announced that the tax would be levied on both commercial and domestic properties. The computer took us to a site labelled “property tax commercial.”

So far, so good.

I am not making this up.

We have a whole ministry dealing with the digitalisation of government information. There was a sub-title reading "Fiscal disparity tax," which I had never heard of before, and shuddered, wondering if this were yet another tax to be visited upon us.

This is what I read: "Fiscal disparity tax is a commercial industrial tax base-sharing programme created in 1971 in the iron range to promote better regional planning and improve equity in the distribution of fiscal resources. 40 per cent of the growth in commercial and industrial property is shared with all taxing jurisdictions in the seven-county metropolitan area. A percentage of the value of each commercial /industrial parcel is taxed at a uniform metropolitan tax rate. The remainder is taxed at the local tax rate.”

What? I didn’t understand a word of that.

Added was: "Special Assessment – an improvement that directly benefits the property is listed as a separate amount on the property tax assessment, based on how much the property benefits from the improvement and the cost of doing the project. Not based on the value of the property. It is extra."

Then came a notice that if the tax assessed was not paid within 60 days after notifying it was overdue, the property would be forfeited. The government, as an option, could sell it back to the owner, which was not guaranteed, or to someone else, in which case the homeowner would not be entitled to any proceeds from the sale.

Is this real?

Then I noticed the e-mail address for queries: wwwstlouiscountymn/govminnessota. And I realised that our Finance Ministry has given us, the taxpaying citizens, on its website, provided by our government, notification of property taxes due in the state of Minnesota in the USA.

Tax on commercial and industrial property has not yet been announced in TT.

So be warned that if they got that wrong, you would do well to check the property valuation assessment you were sent as well.

The Finance Act was passed in 1920. The very common work-from-home system, as it exists now hadn’t started then.

But laws are laws. Does that make your home a commercial property, if, having had your office shut down, you relocated to your home to survive, especially during the pandemic?

Is this where our Finance Ministry found the logic that informed the assumption that in a culture and economy such as ours, where a sizeable percentage of elderly homeowners are living on pension, incomes barely keeping pace with inflation, who they acknowledge may be unable to afford the new tax that started this month – somehow, when they die, their inheritors will be earning ever-expanding incomes enabling them to repay accumulated property taxes their parents died unable to pay?

Although the minister may be right when it comes to ten per cent of people, many of the other 90 per cent, living in a shrinking job and inflationary commodities market, if they still are living in Trinidad, or worse, Tobago, where they are probably still living with their parents. Like their parents before them, they are struggling to pay for the expanding costs of education and support of their families, to provide the calibre of workforce the economy needs and finds difficult, even now to find. And what are the implications?

For those unable to pay the accumulated tax debt left to them, if I understand the government pronouncements, they will forfeit the properties left to them by parents who did their best but could not meet the government tax demands.

Will those properties still be taken over by the government if the surviving members of the family are living there? Apparently so.

And what happens to unpaid property tax for commercial buildings? Will they be sold by the government to the highest bidder, thus widening the already spreading gap between rich and poor? Will struggling businesses that went bankrupt through government shutdowns be sold? And to whom?

According to projections, the intention is that inheritors will be paying increased contributions for NIB; VAT; PAYE (plus Green Fund and Health levy); postal services; internet and other telecommunications; land and sea public transport; judicial licences; applications and services; fuel; applications for public services; private medical and dental care – when short-staffed government services can’t keep up with demand; plus astronomical prices for pharmaceuticals when government supplies just don’t arrive; electricity; and water and sewerage, according to the unpublished but already announced increased RIC fees that will result in a trickle-down increase in everything else.

Over the gap between Christmas and January, a frustrated recent graduate tried to convince me that our taxation system was putting him and his colleagues in a situation of virtual legal slavery where he would be working to only keep himself healthy enough to enable him to keep working to earn money to pay more taxes.

He wants to emigrate; but can’t get the forex.