By George Henry, Gleaner WriterPOINTING TO a $2.7
billion shortfall in revenues to cover the cost of street lighting and other services, Finance Minister Dr. Omar Davies said on Thursday that property taxes would be increased to bridge the financing gap.
The Minister, who was speaking in Spaldings, Clarendon, said it takes just under $4 billion to cover the cost of street lighting, public cleansing and firefighting, but property taxes the revenue source to keep those services operational was only bringing $1.3 billion into the Government's coffers.
Taxes rose nominally last year, following re-assessments of property values islandwide by the National Land Agency in 2002. The increases generated much controversy, largely from corporate Jamaica, which took its protest to Parliament.
Government, as a sort of compromise, had set up a system of waivers for groups such as pensioners, and allowed for challenges to assessments.
Dr. Davies said on Thursday that the taxes were frozen in the face of objections.
However, there were some 2,425 properties valued at between $10 million and $50 million, whose owners were required to pay their new assessments of $320,000, up from $17,000; while seven other properties valued at $200 million and over, paid $4 million, up from $3 million, as announced by the Finance Minister in Parliament.
Davies, who was addressing a 'Face-to-Face' meeting at the United Church Hall in Spaldings, said the only way to bridge the $2.7 billion gap was to increase the tax.
Private Sector Organisation of Jamaica president, Beverley Lopez, said she would make no comment on the matter before consulting with members. Those discussions will take place at a planned meeting next Wednesday, she said.
Dr. Davies did not announce the size of the increase but assured property owners that it would not be implemented as one 'big lick'.
The Finance Minister said he was acting on a proposal made last year by Opposition Leader Edward Seaga that, instead of hitting property owners with a heavy tax at that time, the Government should implement the increases over a period.
He noted that the government could have opted to cut back on the services, but said that would not be in the country's best interest.
Government, he said, has decided instead to adjust the tax on a yearly basis.
"What he (Seaga) said, was, 'let's do it a different way', and it was a sensible proposal. He said every year you adjust it, because every year the cost of electricity moves and that's the model, which we are going to take on board."
According to Davies, the Government has in the past had to cut back on the funding in some areas such as education and health, in order to finance the services that property taxes were meant to cover.
The Finance Minister who went on to describe the amount being collected as taxes from property owners locally, as "a joke", in comparison to what is being collected from property owners abroad, said the deficit must be closed, and warned owners of property to brace themselves for the increase.
The property assessments done islandwide in 2002, saw values moving to $524 billion, up from $76.4 billion in 1992 when valuations were previously done.
The property tax rate is based on a progressive system where 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 high of 3 cents in the dollar as shown.
