The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Opposition’s deputy leader yesterday slammed the Government’s frequent real property tax arrears amnesties as “counter-intuitive”, arguing that they effectively penalised compliant home and business owners.

K P Turnquest told Tribune Business that the administration needed to “get serious” about imposing sanctions against persistent real property tax defaulters, given the Budget debate disclosure that the compliance rate remains at a low 42.5 per cent.

With the delinquency rate largely a product of past enforcement failures, and many Bahamians believing there were no penalties for non-compliance, Mr Turnquest said there needed to be “painful consequences” to incentivise real property tax payment.

Prime Minister Perry Christie, in his 2016-2017 Budget communication, unveiled several real property tax waivers, plus an ‘amnesty’ programme for defaulters who paid 100 per cent of sums outstanding by the next fiscal year-end.

Mr Turnquest, though, described these breaks as “counter-intuitive”, while acknowledging that successive administrations - both FNM and PLP - had frequently used so-called ‘amnesties’ to incentivise commercial and residential property owners to register and pay.

“We’ve been giving amnesties out it seems like almost every year,” the east Grand Bahama MP told Tribune Business, “yet are still only collecting 40 per cent of taxes.

“That’s very disappointing, and says the amnesty programme is not working.”

Prime Minister Perry Christie, in his 2016-2017 Budget communication, revealed that just 42.5 per cent, or 24,008 of taxable properties, had paid taxes amounting to just over $100 million in the current fiscal year.

“The reform of the property tax system is an extended process, made complex by historical under-investment, but the Government is committed to delivering to the public a fairer tax, one with a broadened base that will allow all taxpayers to benefit from a lower tax rate,” Mr Christie added.

Mr Turnquest, though, said continued low real property tax compliance rates spoke to “a more fundamental underlying issue’, including whether home and business owners could afford to pay.

“And if they don’t pay, the Government gives you an amnesty and therefore you don’t have to pay,” the FNM’s finance spokesman said.

“At some point the Government is going to have to demonstrate that it’s serious about collecting the revenue due to it, and take the next step.”

That step, beyond the collection initiatives with private sector debt collectors, such as Kikivarakis & Co, could well lead to liens and charges being applied to properties that are the subject of tax defaults.

The Government has historically used property sales as leverage to extract past due real property tax, but its ongoing fiscal and cash flow woes mean it can no longer afford to wait, and new penalties and sanctions may be needed.

The Government plans to re-introduce for another year the amnesty initiative that waives 100 per cent and 50 per cent of the real property tax penalties, respectively, owed by taxpayers who pay their arrears by March 31, 2017, and June 30, 2017. Only taxpayers subject to collection efforts are being exempted from this amnesty initiative.

Mr Turnquest, though, agreed that the effect of such amnesties was to penalise compliant taxpayers who met their obligations in full, and on time.

“I’ve said that over and over,” he added. “It’s highly unfair for me to be penalised for meeting my commitments.

“Last year they gave a 5 per cent reduction, but that pales into comparison to the bills being written off and penalties waived.

“There has to be some painful consequences for not meeting these commitments, or else there’s no incentive for any of us to pay. It’s crazy.”

The reinstated 2016-2017 amnesty, by waiving the penalty surcharges, means that at the very least, defaulters who pay the outstanding principal will face the same tax burden/liability as their compliant counterparts.

The Government is also going to waive real property tax arrears for owner-occupied homes valued at less than $250,000, an acknowledgement that these liabilities - incurred when the exemption threshold was below that sum - might be impossible to collect.

And real property tax concessions will be extended to owners of derelict buildings in New Providence who intend to demolish and/or renovate these buildings for commercial, educational or social purposes.

Mr Turnquest, meanwhile, also questioned the wisdom of the Government renewing legislation such as the City of Nassau Revitalisation Act for a further year.

He argued that this legislation, intended to incentivise property owners and businesses in the Bay Street and downtown Nassau area to upgrade their properties, had failed to produce the desired results, and something else was required.