The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

While describing the Government’s real property tax amnesty/incentive programme as “a good start”, a well-known realtor yesterday said it should have offered rebates of up to 20-25 per cent to homeowners who were current on their payments.

Although the Christie administration is offering a 5 per cent rebate, over a three-year period, to residential property owners who are up-to-date on their payments, Christopher Armaly, a realtor and appraiser with Morley Realty, told Tribune Business the initiative appeared to give more reward to non-payers and unregistered homeowners.

However, Franon Wilson, the Bahamas Real Estate Association’s (BREA) president, said the 5 per cent rebate and willingness to “automatically review” major hikes in real property tax bills was “more than we could ask for”.

He described the 5 per cent rebate as “over the top”.

Unveiling a four-pronged real property tax amnesty programme, which will take effect from March 1, 2013, Prime Minister Perry Christie yesterday said it was designed to “incentivise increased payments”.

The four strands are:

• To encourage self-registration of residential properties valued at more than the $250,000 exemption threshold, and commercial properties that had never received a real property tax bill, those who registered with the Chief Valuation Officer by June 30,2013, will not be charged any back taxes.
• To ensure registered property owners who were in arrears became current, the Government will waive 50 per cent of the sum owed - assessment and surcharges - by those who are three years or less behind if payment is made by end-June 2013.

For those who are more than three years in arrears on their real property tax payments, the Government waive 100 per cent of the penalty charge only if payment is made by December 31, 2013.

• Apart from the 5 per cent rebate for residential homeowners who are current, the Government is also moving to tackle complaints about people receiving increased billings of between 200-500 per cent.

Moving to make the process “more client focused”, the Prime Minister said all 15 per cent year-over-year increases in residential real property tax bills would be “automatically reviewed”.

The same also applies to residential real property tax assessments where the average yearly increase between revaluations exceeds 10 per cent.

The Prime Minister said this was all intended to “clean up the real property tax register and modernise the administrative infrastructure”, so that the Government could “take a firmer stance in enforcing compliance”.

Real property tax is a key target for the Government, which is hoping to increase revenues generated from this source by 1 percentage point of GDP - some $80 million - by the 2016-2017 fiscal year.

In response, Mr Armaly said of the rebate initiative: “Five per cent isn’t much, but it’s a start. It would be nice for people who have been paying if they had that at 10 per cent, 20 per cent for the next couple of years.

“You’ve got people who are starting afresh, never got an assessment number, and are now being rewarded for starting afresh.

“I’d have been better off sitting in my home, not getting an assessment number, doing nothing, starting afresh and save 10 years of taxes.”

Taking a $750,000 home as an example, Mr Armaly said that while the first $250,000 of that sum was exempt, the next $250,000 attracted a 0.75 per cent tax rate, and the final $250,000 a 1 per cent rate.

This attracted a total real property tax bill of $4,375, meaning that an annual 5 per cent rebate would only return $218.75 to the homeowner - a relatively small sum in the scheme of things.

Mr Armaly also suggested that the Government offer 20 per cent real property tax rebates to homeowners who paid their full bill by June every year, arguing that this would incentivise early payments and help the Government with its Budget management.

He disclosed, though, to Tribune Business that the Real Property Tax Department was working against this through its recent decision not to accept payment by company or personal cheque.

Payment by credit card, he added, meant that the likes of Visa were levying a 4 per cent per transaction fee, further cutting into real property tax revenues.

Arguing that the big issue remained whether the Government would actually enforce real property tax collections, Mr Armaly said: “They’re still trying to get money from a dead horse? How can they get it if it’s not there?

“It’s a good start, and at least they want to address it and start a dialogue, but it doesn’t address the underlying problem, which is that the cost of living is still exceptionally high for Bahamians who continue to invest in their country.”

Pointing to investment or income properties that were leased to tenants, Mr Armaly said their owners were being charged real property tax bills equivalent to a month-and-a-half to two months’ annual rent.

Arguing that it was impossible to pay this, maintenance and other taxes, and still make a profit with mortgage rates at between 7-9 per cent, Mr Armaly said Bahamians were thus being “crucified” by tax rates and “penalised” for investing in the Bahamas.

BREA’s Mr Wilson, though, praised the Government for “rewarding” homeowners who had remained current with their real property tax payments.

He added that it had also listened to complaints about huge increases in real property tax bills, and sought to minimise these.

“They could have dropped the hammer, increased the bill with no care at all,” Mr Wilson told Tribune Business.

“This rebate, for people who have been paying, it’s a reward for whatever sacrifice they have made to keep current. It could have been money for trips to the US, school fees.”

Arguing that the Government could have chosen not to return any money, given its dire fiscal situation and need for every cent it can get, the BREA president added: “This is like some individual giving you their last dollar.”

Michael Halkitis, minister of state for finance, previously said around one-third of the properties that should be subjected to Real Property Tax assessments are not in the Government’s database.

Some 25 per cent, or one in every four, that are qualify for the ‘owner-occupied’ exemption.

Suggesting that the Government is only collecting half the real property tax revenues due to it annually, Mr Halkitis said it was estimated that 35,000 properties which should have been assessed during the 2011 tax year were not covered or registered in the Government’s database.

He added that of the 88,000 properties in the database, some 22,000 were benefiting from the exemption, while close to 50 per cent of those liable to pay real property tax were not receiving their bills.