By Errol Gregory, ContributorASK ANY political neophyte and he/she will tell you that the old adage that politics and economics make strange bedfellows still hold. This is not to suggest that political decisions do not have economic implications and vice versa, however the decisions that are mainly influenced by political considerations, especially in the context of partisan politics, should not be confused with those that are driven by a concern for the broad Jamaican economy.
This is the obvious lesson that emerges from the property tax debate. Faced with a definite economic need to provide funding for street lights and services provided by Municipal Bodies, Government decided to increase property taxes to meet this expenditure. It should of course be noted that for the government to contemplate increasing taxes in an election year means that it had few options. This merely reinforces the extent of the debt problem facing the economy.
With the latest valuations triggering massive increase in property taxes (assessments were not done since 1992), government faced more than loud howls from the public. To soften the impact of the increases, the former Minister of Local Government, using his characteristic charm, decided to introduce property value bands, with average prices, to mask the increases. But the eleven value bands were destined to create confusion especially among multi-property owners and that it did.
So when property holders eventually got their assessments notices, it was not surprising that there was an outcry that the taxes charged were higher than the average prices recommended by the Minister. Minister Bertram subsequently told taxpayers to ignore the notices they received if they exceeded their provisional tax liability. Instead, they were required to pay the provisional tax liability, which is the average tax rate in each of the eleven bands in which properties were divided. Additionally, he reminded taxpayers of an appeal process for those who felt the assessment process was flawed.
With elections now behind us, the matter of the new taxes and how they are impacting on property holders will now begin to re-emerge. Recent reports by the KSAC indicate that they received 100 appeals but it is not clear if the Parish Committees set up to hear appeals have been established in all parishes and the number of appeals that are pending. One financial analyst summed up the current uncertainty concerning the impact of the taxes by posing the question - have we really resolved the issue?
The entire episode however reminds us of the labyrinth that develops when economic decisions are made to accommodate political outcomes. In fact, the issue so far remind us of the many hiccups and uncertainties that develop when taxes are imposed without the usual respect for the principles of good taxation but are done in a cavalier fashion.
When the new property taxes hit home, we will realise the difficulty of making decisions to accommodate partisan political interests and that of the broader economy simultaneously. Ultimately we have to make a choice.
