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Reduction In Property Taxes
KINGSTON (JIS) -- Minister of Finance and the Public Service, Hon. Audley Shaw, has announced a reduction in the property tax rates. Speaking in the House of Representatives, today (April 11), Mr. Shaw said the Government has listened to the concerns expressed by some quarters in the society who felt that the additional taxes were too much over a short time. The Government had introduced a new property tax regime effective April 1, where property tax liabilities were based on the adoption of the 2013 valuation roll. “We have retained the flat $1,000 tax on all properties valued up to $400,000. This will benefit 110,303 persons. These are small plots of land in communities such as Crawle River, Kellits, Mahoe Hill and Bull Head. It is the small farmers in rural Jamaica that are included here,” the Finance Minister said. Mr. Shaw also mentioned that the Government has introduced a tax regime with eight bands ranging from a low of 0.5 per cent to a high of 0.9 per cent.
“This is a big reduction from the tax rates announced recently that ranged from 0.8 per cent to a high of 1.3 per cent of the land value. I should make it clear that this is a progressive rate structure, just as obtained in the case of personal income taxes. It is a far superior regime than the one that obtained under the previous Government where only three tax bands existed at rates of up to two per cent of land valued over $1 million,” he said.
The Minister explained that under the new regime, if a property is valued at $1.7 million, which is in the 0.6 per cent tax band, the owner would still benefit from the flat $1,000 for the first $400,000, as also from the lower rates up to $1.5 million.
“So, he or she would really only pay 0.6 per cent on the values between $1.5 million and $1.7 million. He or she doesn’t pay 0.6 .per cent on the total value of the property and benefits from all the lower taxes as well,” Mr. Shaw said.
The Finance Minister noted that with this change in the tax rates, 448,360 or 58 per cent of the 776,487 properties will now see a reduction or no change in property tax bills.
He added that this is a big increase from the 35.1 per cent who would have benefited based on the previously announced rates for the 2017-18 period.
Mr. Shaw informed that with the new rates, the average increase in taxes for residential properties will now be 10 per cent compared with taxes last year, down from the 60 per cent average increase that was announced at the time of the Budget.
For commercial properties, the average increase will be 58 per cent compared with taxes last year, and down from the 137 per cent average increase that was announced at the time of the Budget.
In addition, for agricultural properties, the average increase is now 40 per cent compared with taxes last year, a significant drop from the 93 per cent average increase under the regime that was announced at the time of the Budget.
Mr. Shaw stressed that 61 per cent of all property owners will see an increase of no more than 15 per cent compared with their taxes last year.
Also, the Finance Minister said despite the reduction in the rates, it is expected that some property owners will still see large increases.
“So, 6,848 properties, representing 0.9 per cent of the total taxable properties with values over $20 million, will still see tax increases on average ranging from 201 per cent to 604 per cent. Most of these are commercial (which include hotels), industrial, agricultural or subdivisions. Only 2,062 are residential properties,” Mr. Shaw said.
“Where properties are part of a business, such as a hotel or a farm, I want to emphasise that relief is available for such property owners, including write-off of the property taxes against income taxes, and special relief of up to 50 per cent of the taxes for agricultural properties,” he added.
The Minister said with a compliance rate of 57 per cent, the Government is expected to see a revenue yield of $6.5 billion, which is a shortfall of $2.1 billion.
This is compared with the revenue of $8.6 billion the Government had expected based on the earlier announced rates.
Meanwhile, Mr. Shaw said the Government will be making a more dedicated effort this year to collect the property taxes owed, including arrears of around $13.5 billion.
He stressed that the Government has waived all penalties on current property tax liabilities in Financial year 2017/18, adding that Tax Administration Jamaica is also willing to facilitate arrangements for payments over time, where there are difficulties to pay.
“Let me also state that the Government has no intention of taking away anyone’s property because they are facing financial or other hardships. For those who have already paid their property taxes on the previously announced rates, any overpayment will be refunded or can be credited towards tax liabilities in financial year 2018/19,” Mr. Shaw said.
He added that notwithstanding the lower rates that have been announced, “we are still committed to providing assistance to those who are unable to pay, and to facilitate those who wish to make objections”.