Sat | Aug 19, 2017

Garth Rattray | Unreal estate taxes

Published:Monday | April 10, 2017 | 4:00 AM

The taxes levied against motorists suggest that the Government believes that transportation is an unnecessary, overindulgent, bourgeois luxury. It taxes transportation with the ferocity that it taxes alcohol and tobacco. Taxes on everything to do with automobiles appear to be categorised as sin tax.

But the most egregious tax adjustment has to do with property (real estate) taxes. Real estate consists of property, land, structure(s) and any natural resource and/or crop. Real estate used to represent a stable, permanent ownership or investment.

Everyone would like to own a piece of real estate. Owning a home or the potential for a roof over your head satisfies the second (next to the most basic physiological need to stay alive) of Maslow's hierarchy of needs - personal safety.

Our human predecessors would hunt or reap food and then retreat into some sort of cave or manufactured dwelling - a safe place, a shelter from the elements and dangerous animals. Imposing heavy taxes on properties causes stressful emotions of instability, uncertainty and the threat of personal peril.

With these huge taxes, real estate has lost its stability and feeling of permanency. Now, many landowners are seriously wondering what will become of them if they are unable to pay the land taxes. Will they become derelicts and mendicants on the streets when they become old and/or infirm? It is immoral for any government to cause any citizen to fret about the future of a place to call home.

In an effort to calm bewildered landowners, the finance minister elucidated the reasons for the overdue but sudden adjustments in land taxes. He also explained how individuals and/or organisations can seek reductions or exemptions to their land taxes.

 

BURDEN ON CITIZENS

 

But, there are a few problems with that. Although the adjustments in land tax rates were overdue, the abrupt imposition of the increased rates is shocking and extremely burdensome for the vast majority of citizens and it is impossible for indeterminate others to comply with.

People don't have that amount of disposable income just lying around. Added to that is the blatant fact that income and salaries have not been increasing commensurately with our financial demands. Whereas the value of land has mirrored inflation, income has not. Mandatory spending and income are widely disparate. The cost of consumables is leaving earnings in the dust. We consume with United States dollar equivalence, but only earn in Jamaican dollars.

Now that property taxes have been increased significantly in most cases, we must brace for a short financial lag time before the rate of inflation ratchets up.

Everything needs a location - all goods, all services and all citizens. In spite of the leaps and bounds in the upward movement of property taxes, landlords are expected to increase rent by only seven per cent per annum. In instances where the land tax has gone up by 300 per cent, landlords and producers of farm products can never catch up.

I have a friend with a relatively small organic farm. She paid $74,500 for property taxes last year and now she's been assessed as owing $224,400 this year! I saw the two 'Notice of Objection' forms. They are formidable and require expenditure in time and money to mount an objection. I suspect that most people will just go ahead and pay because there are many bugbears to objecting.

Direct or indirect ownership of property and access to affordable rent are not privileges; they are vital necessities. I expect that our citizens will register their chagrin in the next general election. Property tax should never reflect valuation figures. It's time that the various administrations widen the tax net and not simply strengthen it. More on that next week.

- Garth Rattray is a medical doctor with a family practice. Email feedback to columns@gleanerjm.com and garthrattray@gmail.com.