Property tax hike but what's the plan to collect? - Gleaner Blogs

March 28th, 2013

Jamaican land owners are now faced with an increase in property tax. The Jamaica Gleaner in an article ?Massive Land Taxes Coming? on February 19, 2013, pointed to dramatic increases coming effective April 1, 2013. The aim of this revenue measure, announced by the Government of Jamaica on February 12, 2013, is to raise $3.4 billion dollars in the 2013/2014 financial year.

Based on the revenue measures announced, a property owner whose unimproved land is valued at $300,000 will now owe $4,000 up from $1,000 before. A property valued at $3,000,000 will incur taxes of $54,500 up from $21,250. (see Jamaica Property Tax Calculator )

It does not end there. The land agency is warning that a property re-valuing program, the first in over 10 years, is now in progress and is scheduled to be completed for the 2014/2015 financial year. If these property values are increased by 100% with no further adjustment in the property tax rates, the land owner above will now have a property valued at $600,000 and would then owe $ 8,500 up from the $4,000 to be paid in 2013/2014. Similarly, a property then valued at $6,000,000 would incur taxes of $114,500 in 2014/2015 up from $54,250.

Higher Tax Rate Higher Delinquency?

As massive as the increases are, what is striking is that $6.4 billion dollars are currently owned in property taxes for the period 2006-2013 as at the end of December 2012. (click image below for larger view)

A further look at the data shows that in 2010/2011, when the last property tax increase was implemented, arrears jumped from over $699.203 million in 2009/2010 to over $1.176 billion, a 68% increase. Could a similar thing happen in 2013/2014? According to the Private Sector Working Group, property tax compliance fell from over 70% in 2003 to less than 50% by 2010.

Should we have a land tax amnesty? If we do, the only hope is that the data is up to date and we don?t have a similar fiasco like the traffic ticket amnesty.

If we could not collect the $6.4 billion that is now outstanding over the last 6 years what is the plan to collect the $3.4 billion in 2013/2014? What you do think? Have your say now.

Tags: International Monetary Fund (IMF), Jamaica, Property Tax

Source: http://gleanerblogs.com/haveyoursay/?p=1926

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