Bertram AN IMMEDIATE adjustment of property tax revenues is to be implemented for April 1, 2002, Minister Arnold Bertram announced in March.
Following is the text of the presentation he made to Parliament outlining the reasons for the increase.
The last adjustment to the property tax was in 1992. Consequently, property taxes are being paid on the value of properties calculated ten years ago, although, the values of these properties have increased between 600 to 1000 per cent, depending on the location of property as well as the primary use of the land.
Our laws require an adjustment to property taxes at least every five years. However, this was not done in 1997. We are now five years behind in making this adjustment, which explains the almost hopeless disparity between the cost of the services and the revenue generated.
A full-scale property revaluation exercise is presently being undertaken by the National Land Agency (NLA). The clear intention is to complete this exercise in time to adjust property taxes for the fiscal year 2002/2003.
The property tax rate is based on a progressive system wherein the higher the value of the property, the more the property owner is expected to pay. Commencing with a flat rate of $50 per annum for properties valued up to $20,000, the rate increases progressively ranging from 0.1 of a cent in the dollar to a higher of 3 cents in the dollar as shown.
The introduction of new property values will result in an increase in the taxes payable. However, there will be no increase in the rate at which property tax is calculated.
We know only too well that an increase in property values does not necessarily translate to an increase in the income of property owners. Hence for some 120,000 parcels of land, the owners will pay $100 per month. This means a property owner earning the minimum wage would only be required to pay less than 2 per cent of his income for property taxes!
In the case where property tax assessment notices are not completed for distribution before April 1, property owners will be allowed to pay their taxes at the last rate as an instalment until they are in receipt of new property tax assessment notices, at which time they will be required to pay the difference.
Even at these rates, a 100 per cent compliance of property tax would see revenues moving from $4.7 billion in fiscal year 2002/2003 to $11.7 billion in fiscal year 2006/07. This contrasts sharply with present compliance rates of 45 per cent.
However given measures to be implemented to improve compliance, as well as to ensure accountability and efficiency, the Jamaican public could be mobilised for a very special effort to bring compliance closer to 100 per cent.
Such revenues invested properly could transform Jamaica by providing:
A sanitation system comparable to international standards
Support for fire services
An adequate programme of community infrastructure
The maintenance of national, municipal and community parks
The rehabilitation of the parochial road network and particularly, the roads in housing schemes.
PROPOSED TAX RATES
For every $1 of the next 0.1 of a cent
$30,000 of value
For every $1 of the next 0.3 of a cent
$50,000 of value
For every $1 of the next 0.75 of a cent
$400,000 of value
For every $1 of the next 1.5 cents
$500,000 of value
For every $1 of the next 2.0 cents
$1,500,000 of value
For every $1 of the next 2.5 cents
$2,500,000 of value
For every $1 of the 3.0 cents
remainder
PROJECTIONS FOR PROPERTY TAX COLLECTIONS 2002 2007
Year 100%Compliance 45%
(J$ Billion) Compliance
| 2002/03 | 4.7 | 2.0 |
| 2003/04 | 5.6 | 2.4 |
| 2004/05 | 7.0 | 2.9 |
| 2005/06 | 9.4 | 3.9 |
| 2006/07 | 11.7 | 4.9 |
