Property Tax Can Off-Set $7bn Budget Deficit

By Stephen Kangal
September 17, 2009
Trinidad and Tobago News Blog

HouseI am now becoming increasingly convinced that the proposed draconian property tax is conceived to defray most of the estimated $7bn budget deficit in the face of an aggressive attempt by Government to bring all residences including those of the new HDC settlements, agricultural lands including the Caroni two-acre farms and new business places into the new, punitive tax net. One will recall the hike in the price of premium gas last fiscal to cover the costs of the $500m Summit of the Americas. CHOGM is next.

Valuation firms will, including Raymond and Pierre, whose senior partner, Mr Afra Raymond has been the principal protagonist/ spin doctor of the tax on behalf of Government will be rewarded with lucrative consultancies/contracts to undertake the rent assessment/determination process. Neither the Valuation Division of the Ministry of Finance nor the proposed BIR/ T&T Revenue Authority will possess adequate in-house resources/expertise to accelerate the requisite assessment/listing process even though it can be done at uniform ATV that will be applicable to whole villages or settlements.

At present on the basis of the dribbles of the details given, the existing house and land taxes contribute $125m in revenues annually to the state. The lowest conservative, estimated percentage increases for each property applying the criteria for property tax determination will be at least 1000% in the urban-sub-urban areas. It will be more than 2,000% in the rural areas. Mine is estimated at an increase of 2300%. But it still remains quite a mystery and could be a shock to homeowners if the prevailing commercial and residential rental rates were to be applied.

Let us use a realistic conservative figure of a lowest 1500% increase on the taxes to be paid on current properties based on the current list of known listed, assessed and under-valued properties on the books of the respective BIR Warden Offices. Having regard to the high level of rents advertised daily in the classified columns of the print media that cannot be ignored by the BIR where one bedroom flat located in the East-West Corridor can fetch as much $3,000 per month and $2,000 in the rural heartland, the new quantum of revenues to be derived from owners of known listed properties will be around a little less than $2bn. That is astronomically way above the total expected property tax revenue provided by the Minister of Finance of $250m for all properties including the 300,000 unlisted. Mr. Afra Raymond of Valuators Raymond and Pierre has estimated an 8 times increase resulting in $1bn in revenues from the current assessed properties.

But the Minister of Finance indicated that almost 300,000 of recently built, modern high rentable valued properties including HDC houses under the three-tiered tax system, from the 800,000 taxable properties located in T&T are outside of the existing property tax net. They do not pay tax. These can be brought into the new tax system by 2010 and must be factored into the total tax collection drive. Perhaps the rental values of HDC houses will be grossly underestimated in line with the practice of dispensing political patronage through this facility to party supporters for electoral security objectives.

This category of high value properties/palatial residences/plant and machinery can potentially bring in revenues of $5bn if a uniform and consistent, objective, market-driven property tax-determination process were to be instituted and applied in an open and transparent manner based on high rentals prevailing across T&T. The property tax will in fact exacerbate an already escalating and over-heating high rental market now advertised in newspapers in US dollars. This tax can be open to corruption and nepotism and political favouritism.

The responsible response in this guava season should have been a progressive taxation in small increases and budget cuts of mega and wasteful projects – not on indiscriminate taxation without consultations by a discredited, cost-overruns stigmatised regime as if it is business as usual, Your Lordship.

The defence on behalf of the under siege mentality of the people who are living in prisons in their homes with expensive burglar proofing, high breed dogs and elaborate security systems rests its case pro bono.

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7 thoughts on “Property Tax Can Off-Set $7bn Budget Deficit”

  1. I totally agree with your assessement of the fact, this program use to assess property tax in t&t was pruchase from a company in the US,this company provide the sofware for a number of counties and municapitalies in the US with a number of factors which was considered by their town counsel proir to writing their program and increasing property tax. what I see in T&T the gov’t wants it and include it in their budget.

  2. I appreciate the time taken by surfers to commnent on my previous article. This tax has been launched as an iceberg to test the response of the electorate navigating the turbulent waters of since 4/5 of the disastrous effects of this iceberg is yet to be seen and evaluated. Minister Tesheira went from an expected revenue of $250m to $750 m and counting. She is revealing the concealed parts of the iceberg in dribbles and has not in fact determined the mechanics of this draconian measure that is the result of vaps. I still stick to my estimate of a punitive $7bn expected revenue that will run riot like a devastating and sweeping tsunami across the purses of the people who cannot afford this huge imposition by an uncaring government that is stigmatised by ubiquitous cost overruns in every thing they touch and build. I cannot understand the paralysis of the people in not rejecting this tax by street protests just like they protest against the rise in food prices.

  3. Amongst the technicalities of this new/incease tax, I took note of your comment on the practice of dispensing political patronage through this facility to party supporters for electoral security objectives. This is a main contributor to the problems we face today as a nation that wants to become a developed country by 2020. Political patronage has been and continue to be a major contributor to our underdeveloped, governments have not encouraged real development. Instead they have continued on the dependency syndrome in exchange for votes, therefore making the government of the day free to do as they wish.

  4. The Nation of Trinidad&Tobago does not have a government, so it’s not Governed.
    It does have an administration. This administration is notable for many things. Of these I will cite the Old Order. He who can will take from him who has no means of keeping what he has.
    This was so 5 million years ago.
    For fear of litigation, I decline to repeat the words to his countrymen of Winston Churchill, at that darkest moment when it seemed the Nazi invasion was unstoppable. Good luck.

  5. Clearing air on property tax
    While she acknowledged that property owners who, for example, paid $200 in residential property taxes may now have to pay as much as $600 a year under the new measure, Nunez-Tesheira said this must be taken in the context of the amount of subsidies Government pays for gasoline, diesel and social services. She also told her constituents that those who earn below $6,000 a month do not pay personal income taxes and the maximum rate is 25 per cent.

    Reality check with our taxes
    The curious thing about our Land and Building taxes is that they have been allowed to remain static over many decades to the point where they become simply nuisance taxes, especially for homeowners. Citizens should not be deceived into accepting the new rates as an equitable reform. They are nothing but a new level of direct taxation of homeowners using the same old “Land and Building” name and in direct response to the huge deficits brought on by the world financial crisis that was not supposed to affect us and was merely a blip. What next? Improved local services or death duties?

  6. i agree with the governments move to increase proprty taxes, but i disagree in their methods. They should give people time to take in the proposed measure. Property taxes are ridiculously low in this country. starting at land taxed at $10-20 a lot is silly. The increase in taxes is more than affordable considering you only have to pay it once a year!
    I think the assessment process needs to be seriously upgraded in this country before the government seeks to increase taxes.

  7. An increase in taxes may be warranted but I am more concerned about the apathy of the populace with concern to the obvious lack of will of the government to address the needs of everyone, not just those that can afford it. I grew up i the Petite Valley area and on my return noted that several neighbourhoods had turned into gated communities and the like, while ‘regular ‘ people had to fend for themselves by relying on the protection and basic services the government provides. I guess that is why over 400 have been murdered and the year isn’t over … yet.

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