Property tax pullback - Shaw expected to announce big change to revised regime
Changes to the controversial revised property tax regime that have upset landowners, including pensioners and business operators, may see the Government losing approximately $1.5 billion in revenue, Finance Minister Audley Shaw is expected to announce in Parliament this afternoon.
That loss may happen because Shaw, according to a source close to the Government’s discussions, is expected to tell the House of Representatives that the revised system will now see only 10 per cent of the more than 600,000 property owners facing increases.
That is well below the 65 per cent of property owners who were on April 1 hit with tax hikes based on increases in the unimproved valuations of their lands. Some owners reported increases of more than 1,000 per cent.
During his March 9 Budget Debate presentation, the finance minister told the nation that some $4 billion in additional revenue was projected from the implementation of the new property tax rates, which were revised based on the 2013 land valuations completed under the previous People’s National Party (PNP) administration. Valuations are to be done every five years, but prior to 2013, the last adjustment was done in 2002.
According to the government source, Shaw will not announce any new revenue measures, such as taxes, to fill the gap. Among other things, the Government reportedly expects the increase in the nontaxable portion of people’s income to $1.5 million to help bring in the lost revenue.
Last week, after calls for a review, the administration advised that Shaw will make a statement today in Parliament, outlining relief for property owners who have been complaining about the new regime, which the Opposition PNP has branded as “wicked”. The International Monetary Fund, with which Jamaica is pursuing economic reforms, has been pushing the Government to implement the new system to get rid of the current “distortive” one.
The Jamaica Hotel and Tourist Association has argued that property owners in that sector would be worse off as a result of the revised system and at one stage instructed its members not to pay the taxes. The Jamaica Manufacturers’ Association (JMA) said it conducted a survey which revealed that businesses and citizens “require adequate time to adjust to the changes”. The JMA also said there were large variations in rates to be paid on similar properties by different owners.