Imbert: Government listened to public complaints - Pushback leads to tax cut

PUBLIC pushback over valuations for property tax payments and concerns on how this tax is evaluated caused the Government to take immediate steps to rectify the situation. But this does not mean that property tax payments have been suspended. This from Finance Minister Colm Imbert who made a statement in Parliament on March 15.

“Contrary to media reports and postings on Facebook and elsewhere, there has been no ‘suspension’ of property tax.”

What has happened, Imbert continued, is Government has noted the various concerns raised about residential property tax and taken appropriate action to alleviate the concerns as the new (property tax) system is being rolled out.

On March 14, people were concerned when they saw notices posted at several Board of Inland Revenue (BIR) offices stating property tax payments were suspended. While differently worded, the signs all indicated tax payments had ceased on March 14 “with immediate effect until further notice.” Questions circulated on social media as people wondered what this meant.

People such as pensioner Steve Khan described the tax as unfair. He showed correspondence from the Finance Ministry, which said the annual rental value (ARV) of his house at Panco Lane, San Fernando, a board and concrete structure, was $96,264. Khan claimed that no one ever came in person to evaluate his property.

The Opposition UNC also demanded clarification from Government on the suspension of property tax payments.

On Friday, Imbert also said Government will rectify problems associated with the collection of property tax when it debates the Property Tax (Amendment) Bill 2024 to the House on March 18. The bill was laid in the House on Friday.

“On behalf of the government, I wish to express my deep regret to all of those who were inconvenienced.”

With the bill now before the House, Imbert requested his ministry’s permanent secretary to ask the BIR to stop collecting the property tax until the new rate of residential property tax is in effect. Under the original system, the tax is calculated on the basis of three per cent of the ARV of their residential properties. Up to March 13, he continued, a total of 801 property tax payments were made, totaling $1,030,864.55. “All of these taxpayers will be issued with new tax notices at the new rate of two per cent and refunded. I have asked the BIR to do so promptly.”

Regarding notices posted on the doors of some regional collection officers about property tax payments being suspended until further notice, Imbert said, “These notices were not authorized and should not have been put up, especially in view of the fact that the Property Tax Amendment Act 2024 is not yet law.”

His investigations into the matter revealed that some BIR employees put up these notices after they became aware that an amendment to the act would be debated in Parliament next week. While their actions may have been guided by good intentions, Imbert said this was done without authorization, his knowledge, or consent. “This is not the way that a Cabinet decision should be communicated to the public, especially on a matter as sensitive as this.” Imbert was disappointed about this procedural lapse. He hoped the public servants involved in this matter would learn from this mistake.

Imbert was confident that the bill would address the concerns people have about property tax. One of its provisions was a reduction in the rate of residential property tax from three to two per cent of a property’s ARV. Imbert said this represents an effective reduction of property tax by 33 per cent. “This is intended to reduce the impact of the new valuations since it is clear that some property owners believe that the old 1948 valuations should still be used in the modern era, in 2024, and it is important to gradually adjust and correct that erroneous belief.”

Imbert told MPs that regulations which allow indigent, elderly, or infirm people to apply to the BIR for a deferral of property tax payments were published on Friday. He said an order will soon be published to extend the time for people to object to valuations of their residential properties from 30 days to six months. “The intention here is clear. The Government intends to be transparent with respect to the valuations that have been sent to residential landowners and occupiers by the Commissioner of Valuations and will give owners and occupiers additional time to lodge objections, which must be determined and answered by the Commissioner of Valuations in the first instance before being adjudicated upon by other authorities if there is still a dispute.”

Imbert said these measures would go a long way in addressing the teething issues currently being faced with respect to the valuation and collection of residential property tax. “We also undertake to take all necessary and future legislative and operational measures needed to ensure that property tax is implemented equitably across Trinidad and Tobago.”

He listed some of the issues about property tax raised by property owners. These include ARVs not being consistent with the expectations of property tax owners or with the current property rental market; residential landowners and occupiers in close proximity of each other complaining about discrepancies in ARVs that appear illogical to them and some property owners wanting their property tax to be based on ARVs which could be as old as 75 years.

Imbert elaborated on this point. “In one case, a property owner who owns a substantial property is insisting that his property tax in 2024 should be in the vicinity of $230 per year, which is equivalent to a current ARV of $8,400 or a rental value of $700 per month, simply because $230 a year is what he paid many years ago under the Land and Building Taxes Act (LBTA).” He said the fact that this property owner’s ARV dates back to the 1960s was of no concern to that person.

Imbert added that the genesis of problems related to the valuation and collection of property tax lay in vagaries in pre-independent legislation like the LBTA and the Taxes Exemption Act, established in 1920 and 1902, respectively. Those vagaries, he continued, created situations where the law covered Tobago and certain parts of Trinidad or excluded cities and boroughs. “It is therefore not reasonable to expect that the rationale and systems for the collection of taxes on property that obtained in 1920, a time when Trinidad and Tobago was still a colony of the British Empire, would still be relevant 100 years later.”

Imbert said different laws, pre and post-independence, created serious inequality when it came to the valuation and collection of property tax. He told MPs that the last property valuations in Tobago were done in 1948, while similar valuations in Trinidad were done in 1975 (Port of Spain), San Fernando (2004), and Point Fortin (2008). “This meant that the amount of tax being paid in relation to various districts and Tobago would have been highly disproportionate to the cities and boroughs, which had much more recent valuations in place. This was far from fair and equitable and highly artificial.”

Imbert said, “This has not been a simple exercise since we have effectively been navigating in uncharted territory.” While the Property Tax Act has been on the law books for almost 15 years, he continued, it is still considered to be novel legislation as it was never previously implemented. He said, “Accordingly, as is normally the case with the operationalization of any new law, there will inevitably be teething issues that arise that need to be addressed.”