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Budget Debate

Property tax debate heats-up
By Phyllis Thomas, News Editor

Debate of the 2002-2003 Budget was given the main spots on the news pages for much of the week that was.

Audley Shaw, Opposition Spokesman on Finance, Roger Clarke, Minister of Agriculture, Derrick Smith, Opposition Spokesman on National Security and Edward Seaga, Leader of the Opposition all made their contributions to the debate.

One important highlight of Mr. Shaw's contribution concerns adjustments to be made to the property taxes. Mr. Shaw said that there could be increases as high as 10,000 per cent for property owners. For example property taxes of $80 a year could rocket to $8,700 a year when the Government makes the adjustments.

I have not heard any rational denial of these claims by Mr. Shaw although The Gleaner reported that Government members of the House interrupted him as he made the announcement, accusing him of misleading the public. Several attempts at continuing his speech were met with what is characteristic of important debates like these be they Parliamentary or at Parish Council level - verbal mobbing of the person on his/her feet at the time. The Gleaner said that Mr. Shaw relented. But what would have been more instructive would have been for the Government members of Parliament to allow him to complete his presentation on that issue and then they make their rebuttal.

There are various platforms from which they can do so before the Finance Minister wraps up the debate, if they see the need to immediately repair any damage that Mr. Shaw might have done to the fragile temperament of the Jamaican voter. But their action in Parliament has left uppermost in people's minds, these figures that could be introduced: from $43,230 to $101,450 a year for commercial property in New Kingston; from $170 a year to $3,700 a year for residential property in Duhaney Park; from $110 to $11,700 annually for residential property in St. Elizabeth, etc.

Tax adjustments cannot be as high as that - people will not be able to afford it - the retired home owner for example, whose pensions are already meagre. The package of the pensioner includes the smallest of fortnightly sums, given under the National Insurance Act of 1965. For the Government pensioners in particular, their allowances will certainly prevent them from meeting those tax obligations, they will not be able to pay the fines and penalties to be imposed as a result. So the next thing that will happen is that they will be hauled before some court and probably thrown in debtors' jail - the same place they keep convicted gunmen and other criminals. We would have been digging early graves for many.

The same kind of reasoning can be applied to many commercial property owners because many of them are small business people for whom the current market environment is already hostile. Many will be forced out of business if the proposed taxes become effective.

However, none of the above arguments should be taken to mean a failure to recognise the need to adjust the levels of property taxes being paid now. Many of these current rates are based on property valuation of up to 10 years ago and though the real estate market has been soft for some time now, values of properties have not remained stagnant. For example, some Portmore houses valued at $400,000 in 1993 now value $2 million. But does that mean that the owners can afford to pay rates of in excess of even $2,000 a year? According to the figures released by Mr. Shaw, in some cases residential property tax will be $3,700 based on a valuation of $600,000 it means then that that Portmore resident with his $2 million house could find himself paying $12,333 a year for the property.

We all accept that the current rates of $80 and $170 a year are ridiculous and that people say it costs them more than the $170 to travel to the tax office to pay the $170. Furthermore, the Government had already indicated that these taxes would have been increased.

But the Government needs to assure the public that Mr. Shaw is very wrong about those proposed tax rates.

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