The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government’s real property tax amnesty has yielded $9.1 million in extra revenues during its first three months, a Cabinet Minister said yesterday, with more than 1,000 taxpayers “settling” their outstanding bills.

Michael Halkitis, minister of state for finance, told the House of Assembly that up to May 31, some 471 property owners had registered with the Chief Valuation Officer for the first time.

Kicking off the 2013-2014 Budget debate, Mr Halkitis said these new additions to the property tax roll had also contributed $1.1 million in real property tax revenues to the Treasury.

As for the other three strands of the Government’s four-pronged amnesty programme, the Minister said 415 property owners whose tax payments were in arrears by three years or less had settled with the Treasury.

This, Mr Halkitis said, had generated $4.8 million in revenues. And, for those property owners whose tax payments were in arrears by three years or more, some 114 accounts had been “settled”, yielding a $2.44 million tax take.

Finally, for those accounts that were ‘current’, Mr Halkitis said 77 had been “settled”, generating $728,000 in additional revenues. In total, some 1,077 accounts had been “settled”.

“The real property tax amnesty has yielded $9.1 million in additional revenues over a three-month period from March 1 to May 31, 2013,” the Minister told the House of Assembly. “We believe it has been a successful amnesty programme.”

Responding to critics who had argued that the amnesty programme’s structure was weighted too heavily in favour of delinquent taxpayers, and discriminated against those who were current, Mr Halkitis admitted that the Government’s enforcement resources were simply unable to cope with the scale of delinquency.

“The fact of the matter is that over the years this problem has grown to such an extent we don’t have the manpower to go out and assess these people,” Mr Halkitis conceded.

Noting that the 471 accounts now added to the real property tax roll will start to receive bills annually, the Minister pledged that there would “be more follow-up after bills were sent to ensure we manage these delinquencies better”.

And Mr Halkitis also indicated that the Government would seek to involve the private sector in its efforts to better enforce and administer real property tax, although he did not go into details.

“Going forward we intend to make use of private expertise to ensure the registries are as complete as possible,” Mr Halkitis said.

An increased roll, he added, would mean an expanded tax base and potentially higher yields, allowing the Government to “even consider a time when we can give people a reduction” in property tax rates.

The Auditor-General’s annual reports consistently estimate that $400 million in real property tax revenues remain uncollected, a sum that continues to rise each year.

The Christie administration has targeted increasing real property tax yields as one of the ‘low hanging fruit’ in its plans to increase revenues, and thus narrow the fiscal deficit and national debt.

Real property tax revenues are currently around $90-$100 million per annum. For the 2013-2014 fiscal year, the Government is projecting it will earn $110.613 million - a $6.103 million drop from the $116.716 million projected in 2012-2013.

Mr Halkitis yesterday reiterated the Government was looking to increase real property tax yields by a sum equivalent to one percentage point of gross domestic product (GDP) by the 2016-2017 fiscal year.

This would represent an $80-$90 million revenue increase, consistent with his earlier comments to Tribune Business that the Government was eyeing a $200 million annual target for real property tax revenues.

The four components on the real property tax amnesty programme, which ends on June 30, 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.

• A 5 per cent rebate, over a three-year period, is being offered to residential property owners who are up-to-date on their payments.