By NEIL HARTNELL
Tribune Business Editor
THE Government is mulling whether to expand the VAT Appeals Tribunal to cover all types of tax complaints, the Deputy Prime Minister pledging: "We don't want to be unfair to anybody."
K P Turnquest, who is also minister of finance, told Tribune Business that the tax appeals process "needs some improvement" to ensure that taxpayers - both individuals and businesses - have swifter redress for legitimate grievances.
Speaking after this newspaper last week revealed realtor concerns that "crazy" real property tax valuations were threatening to "tear apart" Abaco's real estate market and undermine its second homeowner-driven economy, Mr Turnquest said he was aware of the issue.
"We've gotten a number of complaints from Abaco in respect of Stamp Duty and real property tax," he confirmed. "Most of them we have addressed in one way or another.
"I think that what needs some improvement is the appeals process. We are working to get the appeals process up and going. Right now there is the VAT Appeals Tribunal, and what we're thinking is to expand that to a Tribunal for all tax types."
Mr Turnquest said such as move was "conceptual thinking at the moment", meaning that no formal steps have been taken by the Government to implement such a plan, but it will likely be welcomed by the private sector.
Disputes over whether tax is due, and how much, have increased in frequency and complexity since VAT's introduction on New Year's Day 2015. These have added to the complaints voiced over Stamp Duty, Customs duties and real property tax valuations/assessments, with many in the private sector believing they have little opportunity for swift, easy redress. The only way to currently challenge real property tax billings is to hire a licensed appraiser, have a valuation performed on your home/business/land and hope the Inland Revenue Department accepts it. As a result, many in the private sector have been calling for the Government to implement a structured appeals process that imposes minimal costs.
Mr Turnquest, responding to the real property tax complaints from Abaco and elsewhere, said the Government was prepared to adjust billings "where the case can be made" that real estate was overvalued. "There's no one rule for foreign versus Bahamian, there's no rule for Abaco versus Nassau and Long Island and anybody located elsewhere," the Deputy Prime Minister told Tribune Business.
"We certainly don't want to be unfair to anybody. We want to encourage development. We want to facilitate that. To the extent we need to look at real property tax valuations, where the case can be made we're willing to do that and adjustments will be made where necessary."
Reiterating that the Government was willing to correct real property tax billings and assessments "to the extent we get it wrong", the Deputy Prime Minister said there was another side to this issue. This involved real estate owners seeking to evade, avoid or minimise due tax payments by under-valuing their properties and/or using other underhanded methods to avoid paying their fair share.
"There's always a testing that happens from both sides to be fair," Mr Turnquest said, "and at the end of the day - through discussion and a negotiated process - we hopefully come to a fair position."
Judith Whitehead, Graham, Thompson & Company's managing partner, told last week's Bahamas Business Outlook that the Government had finally woken up to the fact that real property tax was a potential "treasure trove" of revenue currently going uncollected.
She added that the Government was aggressively going after defaulters by using law firms and debt collection agencies, and warned Bahamians not to rely on the traditional practice of running up thousands of dollars in arrears and then seek to pay it off from the proceeds when the property was sold.
"It is true to say that for years we've known that real property tax assessments have been under-realised," Mr Turnquest told Tribune Business, "and so we are going through the process of realigning assessments and making sure no one is treated unfairly; the neighbour is paying one rate, you're paying another.
"Adjustments will be made as we're going along. We want to be fair; we don't want to discourage development. To the extent it can be shown assessments are being arbitrarily or unfairly administered, we'll listen.
"We are doing a lot of work in respect of real property tax with regard to modernising the system. We expect that's going to result in improved collection efficiency, and we'll hopefully see the numbers when we do our mid-term review [Budget]."
Abaco realtors last week told Tribune Business that the Department of Inland Revenue "seems to be completely out of control as to valuations of property owned by foreigners", adding that complaints were now being voiced "across the board".
They cited numerous cases where foreign real estate owners were receiving bills for current real property taxes, plus arrears, that were higher than the subject real estate's worth. Among the examples given was a 91 year-old American, a 50-year resident of the Bahamas, who was billed for $91,000 on a property appraised at $60,000 to $70,000.