Property taxes are too low, says economist
At least one tax expert and an and economist believe that Jamaicans are paying too little property taxes to meet the expectation for its eventual use.
Allison Peart, managing partner at the Ernst & Young, said some Jamaicans complain about the local rate of taxes on property, but were willing to go overseas to pay higher rates.
"We line to up to get visas to US and Canada and we pay their property taxes, which are higher. But in Jamaica, the Government has to pursue a lot of us because we don't pay as much attention to the property tax," Peart said at a CAPRI forum on Tuesday at the Spanish Court Hotel in New Kingston.
"When I look at the rate of property taxes and what we expect from it, I think it's too low. We like to complain about our level of taxation and we don't look at what we are paying for, and if we pay more, can we get better service?"
For the April to June period this year, just over $3.7 billion was paid by property owners while $3.6 billion was collected during the same period last year.
"My concern is the rate of the property tax, as the study has shown it is quite low in terms of when you compare it to the OECDs (Organisation for Economic Cooperation and Development) and the countries that Jamaicans like to immigrate to," she continued.
Lower income tax, GCT
Peart was supported by Executive Director of CAPRI Dr Damien King, who argued that higher property taxes would trigger a reduction in income taxes and lower GCT.
"Taking the cost of distortion into account and the international comparisons to which Allison referred, our property taxes are indeed too low," the CAPRI boss said.
He said the current property tax scheme is the least distorted of the taxes since the amount of land the taxes are calculated on does not change.
"It seems to be a behaviour: we don't like to pay; we take forever to pay, it is something that we need to change, we need to change from our children growing in terms of financial literacy and ensuring that we pay," he further mentioned.
In the meantime, CAPRI concluded that value-added taxes are far more efficient than income taxes in economies like Jamaica, where there is a large percentage of people outside the formal sectors.