The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government was yesterday urged to extend its proposed review of sharp real property tax bill hikes to Stamp Duty, a leading realtor disclosing that many payments were not being accepted because deals were perceived as ‘contrived’.

Christopher Armaly, a realtor and appraiser with Morley Realty, told Tribune Business that Government officials were still refusing to Stamp and record conveyances for properties that had sold for much less than in previous, pre-recession transactions.

Taking the example of a transaction he was recently involved in, Mr Armaly said the property sold for around $200,000 when a previous transaction was worth $320,000.

“That could have been 10 years ago in a hot market,” he said of the $320,000 transaction. “But they’re [the Government] asking for another $12,000 before they record the conveyance.”

At the latest $200,000 price, a Stamp Duty payment of $20,000 is required at a 10 per cent rate. Yet, using the former sales price, officials believe they should be receiving $32,000.

“How’s the purchaser supposed to afford that? They’re penalised for getting a good deal,” Mr Armaly told Tribune Business., “Who are they to dictate what it is? The market dictates the price, not the Government.

“I argued something with them back and forth the other day. It took all day, I supplied measurements and finally they came around. It took hell to do it.

“It happens all the time. Yes, it would have sold in 2006 for $100,000 more. In 2006, things were booming. It’s not happening today.”

Mr Armaly was backed by Michael Lightbourn, Coldwell Banker Lightbourn Realty’s president, who said: “This has been going on for a long time.

“What they [the Government] don’t understand is that pricing has come down in many areas. We had a place that sold for 50 per cent less than it did six years ago, and they questioned that, but it was a legitimate transaction.”

Messrs Armaly and Lightbourn were speaking after Prime Minister Perry Christie, in his Mid-Year Budget, promised the Government had introduced a process to “automatically review” sharp real property tax bill hikes.

Year-on-year increases of more than 15 per cent, and instances where bills had risen by more than 10 per cent per year between assessments, will be included in these reviews.

Mr Armaly praised this as “a start” and said the Government was “at least entertaining” the idea, acknowledging this had been a problem. He suggested, though, that the percentage thresholds were too high to help many persons.

Mr Armaly had told Tribune Business in late 2012 that the Bahamian middle class were being “taxed into oblivion” by real property tax bill increases of between 200-500 per cent.

Mr Armaly said them: “They’re going after people already paying as opposed to those who don’t pay or have no interest in paying.

“They’re going after them hard - 200 per cent, 300 per cent, 400 per cent, 500 per cent increases in some cases - and they’re taxing the middle class into poverty.

“They just don’t have it. People don’t have $4,500 to pay in taxes when they’re making $50,000 a year. If you’re making $100,000 a year, can you afford to pay 5-10 per cent of it in taxes? With the cost of living, they can’t afford it.”

Mr Armaly suggested that the Government also look at increasing the real property tax exemption threshold from the current $250,000 to $350,000, given that many middle class Bahamians - living in $300,000 to $400,000 homes - simply could not afford annual bills of $3,000-$4,000.

“It’s a huge issue,” he added. “If people don’t have the money, the Government’s not going to get it.”

Mr Armaly also suggested the Government continue to look at real property tax amnesty programmes, noting that there was “a rush late last year” to pay.

While conceding that the most recent amnesty had failed to reward persons who were current with their tax bills, he added: “You can’t have a weak system for 20 years and expect to have everybody rush in during the first six months.”

Mr Armaly said the Government should also incentivise real property tax payers to pay promptly, offering 20 per cent discounts to those who paid by June, and 10 per cent for August payments.

“That way the Government knows what’s coming in,” he said.