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Unconscionable City Hall interest rates inflate consumer indebtedness
Unconscionable interest rates set by City Hall for property taxes have largely contributed to the high level of indebtedness by consumers to the City Council.
For example, City Hall currently floats an interest rate of 275% of the assessment of a commercial property located in the city.
The percentage has been an issue of debate for some time now with the interest and the compound interest on the taxes owed by commercial and residential properties amounting to three, five and ten times above what is actually owed.
The formula set by the M&CC has resulted in many businesses who find themselves in arrears, owing exorbitant sums of money to the municipality.
The demand set by the council has been a source of concern for several businesses operating in and throughout the city. Some businesses owe taxes dating as far back as the 1990s.
A city company owed $2.8 million in taxes over 12 years. The council has applied $14.1M in interest and compound interest. It has demanded a further $300,000 which takes the total indebtedness to some $17.1M.
An employee of the council explained that based on its computation, the interest rate rises every day that the taxpayer fails to pay the amount of rates due. The officer said that the interest is based on a formula worked out by City Hall. However she refused to divulge further what formula is utilized by the council.
The official nonetheless explained that earlier this year the Council had taken steps to update property rates for several large corporations and businesses operating in the capital.
This was in an effort to collect outstanding monies owed to the council.
She explained that recently M&CC increased the rate from 250 per cent to 275 per cent.
But this increase according to the officer “is just a drop in the bucket; it cannot even begin to offset the expenses of the municipality.”
She also argued that the inflated interest incurred on the rates might be the reason why many taxpayers are in default.
The officer instead stated that it is the duty of property owners to pay their taxes on time.
“It has nothing to do with the council,” she added, noting that the council has an installment system in place which allows ratepayers to pay taxes each quarter of the year.
The woman further noted that the Council is authorized by law to set the rate of residential, commercial and other categories of properties in Georgetown.
The law gives the council that power, the official said, pointing to Chapter 28:01 of the Laws of Guyana.
She noted that according to Chapter 28:01 “Every council shall be the rating authority for and shall have powers to make and levy rates within, each rating area in its council area.”
Just recently, the Council waived $19 million in interest rates to collect $7 million the customer owed.
The council was hungry for funds to pay municipal workers who have not been paid since last month.
During a meeting on Monday, Deputy Mayor, Lionel Jaikaran announced that he collected the $7 million cheque from a lawyer representing the taxpayer.
A copy of the rate assessment set out by City Hall
“In this transaction, we have bent backward and waived interest just to get this transaction…We need the money,” head of the Finance Committee, Junior Garrett said.
“Payments have been delayed all the time because of our financial situation, and I want to implore on councillors to please emulate what the Deputy Mayor has done, and I hope that tomorrow he brings in some more, because we still have November and December salaries.”
He expressed the hope that other councillors would take the initiative similar to the Deputy Mayor’s to assist in bringing in outstanding revenue.“
The customer who owes $2.8 million in taxes said that he is prepared to send the cheque immediately.
Garrett noted in the past the M&CC had employed various methods to get defaulting rate payers to clear their outstanding accounts with the cash-strapped council.
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