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Eustace expresses doubt about new property tax regime

Eustace expresses doubt about new property tax regime

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Opposition Leader Arnhim Eustace doubts that a new property tax regime will be implemented here this year.{{more}}

Parliament has sent the draft legislation to a select committee, but Eustace said he thinks it needs “substantial amendments” before coming to the assembly floor for debate on September 13.

“Looking at the legislation and all the things required, I can’t see this finishing this year,” Eustace said on Monday.

If the Bill becomes law, it will see property owners paying as tax, a percentage of the market value of the property, rather than the rental value.

But Eustace said he disagrees with some of the provisions of the draft legislation.

“I have studied the Bill. I have listened to some of the comments and discussions, which will continue over the next few weeks … [and] there are one or two things I want to highlight,” he said on his weekly radio programme.

The Estimates of Income and Expenditure that lawmakers passed in December anticipates that with the new protocol, property tax receipts will jump to $6 million this year, up from $2.7 million in 2011.

Prime Minister Dr Ralph Gonsalves, who is also Minister of Finance, has told Parliament that owners of properties worth more than $25,000 on the market could this year begin paying 0.08 per cent of the value of the property in taxes, an increase of about 15 per cent.

“The Bill, as it is now, does not have any rate. A rate will come in the regulations. So what rate was used to determine what you going get in the Estimates?” Eustace said.

He further said that the rate legislators agree on might be different from what is expected and could see the Treasury receiving less or more money than expected from property tax.

“So, that is an area where I have some grave concerns as to what, finally, will be the rate you charge,” said Eustace, an economist.

“So, a lot needs to be done still to make this exercise very transparent and that is why I say I don’t see this tax coming into being during this year, 2012.”

Sale price concerns

The draft legislation, Eustace further said, allows the government to sell a property for outstanding taxes, with the minimum price being the amount owed, plus legal costs.

“I don’t agree with that. … Now, suppose you have a property and you have a mortgage … and you get into some difficulty there, what happens?

“The property can be sold for less money, which gives the government what is owed to them, but don’t cover the mortgage that you owe.

“When properties are put up for sale, you must try to get the price that covers all the cost, everything that is associated.

“In other words, the value that you should get should not make the person reach a situation where they lose everything,” Eustace said.

“I think that some substantial amendment would be needed to deal with that matter,” Eustace said, adding that there are “some other matters like that in the Bill, which have to be dealt with.

“I am not at all satisfied that this exercise is near completion … And I certainly don’t expect it to be implemented in the year 2012,” he said. ([email protected])

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