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Property tax system needs to be reviewed – PSC
The Private Sector Commission (PSC) believes that the entire property tax system, as it relates to individuals, needs to be reviewed, as it is a form of triple taxation.
PSC Chairman
Ronald Webster
Chairman of the PSC, Ronald Webster, says that the PSC in recent years has made several successful recommendations to the Ministry of Finance over improvements to the taxation system. The most recent being those considered in the National Budget of 2013. They included increases in the tax threshold, reduction of income taxes, and adjustments to the property tax structure.
Webster said that where Property Tax for Companies is concerned, the higher property tax threshold will undoubtedly help the many small companies; the larger companies would be faced with a much higher rate of property tax, as the fixed assets valuation basis had been moved from January 1, 1991 to January 1, 2011 and true property and replacement costs had moved dramatically over that period.
Adjustments to the property taxes structure are a fairly complex process that will have a bearing on cash flows and need to be monitored carefully to avoid overkill.
According to the Government Information Agency (GINA), “With effect from year of assessment 2014, companies will be charged at the following rates: the first $10 million of net property will be taxed at zero percent, the next $15 million of net property will be taxed at 0.5 percent, and the remainder of net property will be taxed at 0.75 percent.
In other words, whereas the current tax-free threshold for property tax on companies is $1.5 million, the new threshold will be $10 million, as a result of which thousands of small businesses with net property below $10 million will no longer be subject to property tax.
With effect from year of assessment 2014, individuals will be charged at the following rates. The first $40 million of net property will be taxed at zero percent, and the remainder of net property will be taxed at 0.75 percent. In other words, whereas the current tax-free threshold for property tax on individuals is $7.5 million, the new threshold will be $40 million, as a result of which tens of thousands of low and middle income earners with net property below $40 million will no longer be subject to property tax.”
In highlighting the need for a review, Webster explained that individuals are taxed on their salaries, taxed on their bank account savings, and then on their fixed assets including their properties.
“All this needs to be looked at; however, the PSC has not gone into any details to offer a position on this for the 2014 budget where the focus of the PSC is on infrastructural development. But, it remains high on our agenda and would be addressed in greater detail next year.”
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