By NEIL HARTNELL
Tribune Business Editor
The government has no plans to write-off its $480m in real property tax arrears and will “pursue” all delinquents “with vigour”, its top finance official warned yesterday.
Marlon Johnson, the Ministry of Finance’s acting financial secretary, told Tribune Business that barring any change in policy it will continue to target every tax cheat through a combination of private sector collection agencies and the soon-to-be created Revenue Enhancement Unit (REU).
He revealed that the latter will create a call centre and employ a collections team to “chase down” defaulters who have contributed to almost half a billion dollars in uncollected property tax arrears identified by the auditor general in his latest report for the 2015-2016 fiscal year.
The government is also aiming to “better co-ordinate and target” the work performed by private sector collection agencies on its behalf, Mr Johnson disclosed, focusing them on the “more challenging cases” involving real property tax cheats.
While it may appear that the government has little choice but to write-off a substantial proportion of the $480m real property tax arrears mountain in the auditor general’s report, the acting financial secretary said it was no conceding defeat on any of this sum just yet.
“Our intention is to collect all the tax that is due,” Mr Johnson told Tribune Business. “As it stands now, no [write-off] has been contemplated. The government may make a policy decision, but for the time being we will certainly pursue all taxes due.
“We will continue to look and find a reasonable approach where necessary, and do so in a way that makes sense for the government and taxpayer. If people show a preparedness to pay, and come up with a reasonable payment arrangement, we will continue to work with persons.”
The 2019-2020 budget communication made much of the government’s recently-announced door-to-door campaign to visit all 100,000-plus properties on New Providence, and assess them in a bid to develop a standard, fair methodology for property tax valuations, while adding 9,000 properties to the tax roll and collecting an extra $21m in revenue annually.
However, it made no mention of how the government planned to tackle the build-up of past real property tax arrears that features prominently in every Auditor General’s Office audit of its annual financial accounts. Those arrears are now more than double the projected annual deficit of $229m for the current 2018-2019 fiscal year.
Mr Johnson yesterday explained that a key element of the government’s strategy is the newly-formed Revenue Enhancement Unit (REU) that will formally begin work on July 1. “A part of the Revenue Enhancement Unit team is a call centre team and a team of collection agents whose job it will be to go after the balance of delinquent property taxes,” he said.
“That call centre team and the collectors will do the field work and go out and chase hard to collect real property taxes. In addition, for some of the more challenging cases the Government has outsourced some of that to collections agencies that are experts in the field.
“That’s part of the plan,” Mr Johnson added. “Certainly, the Government is looking to go after that with the same degree of vigour. There was some move to that already with the private sector collectors but we believe there needs to be a bit more of a refocus on the challenging cases.
“There are a number of cases before the courts where they’ve worked it all the way through and got to the point of judgment. They’re hard at work, the collections agencies, but it’s the Government’s view that their efforts need to be a bit more co-ordinated and targeted.
“There are things happening, and collections going all the way through to take persons delinquent in property taxes to court in efforts to collect. We don’t like to write-off. We attempt at times to make payment arrangements with persons, and there’s some accommodation in the new legislation for that.”
The Real Property Tax Amendment Bill 2019 “empowers” the chief valuation officer to waive penalty surcharges when a tax delinquent enters into a payment plan to settle tax arrears, with the Auditor General’s report for the 2015-2016 fiscal year again highlighting the Government’s chronic under-performance in collecting real property tax.
“Revenue collected for real property tax in 2015-2016 amounted to $103.741m in comparison to 2014-2015’s total of $107.004m. The revenue dropped by $3.263m or 3 percent,” the Auditor General’s report said.
“The revenue collected did not meet the budget expectation of $151.217m. It fell short by $47.477m or 46 percent. The decline in revenue collection for commercial property tax and foreign-owned undeveloped property tax, in part, contributed to the revenue shortfall.”
Commercial real property tax revenues for 2015-2016 came in $17.01m under-budget at $49.56m compared to the projected $66.57m, a figure that was also lower than the $51.995m collected in the prior fiscal year.
Collections on foreign-owned undeveloped land fell short by almost 50 percent, coming in at $24.413m as opposed to the projected $42.631m. Real property tax for owner-occupied properties was also lower than projected for 2015-2016, falling short by $11.249m at $30.768m compared to $42.017m.
“The $36.762m outstanding real property tax for 2015-2016 is a notable reduction when compared to the $110.718m reported in 2015,” the Auditor General found. “However, the cumulative outstanding amount of $479.609m is still high.
“The Office of the Auditor General noted that three private debt collection agencies, Department of Inland Revenue’s debt management unit, Revenue Enhancement Unit and Department of Inland Revenue’s compliance and enforcement unit are all engaged in collecting the outstanding real property tax.
“We recommend that efforts continue to be made to collect the outstanding real property tax, particularly the prior year(s) arrears to reduce the cumulative amount and enhance revenue.”