Property Tax Amnesty ‘Rewards Delinquents’
Realtors yesterday give a mixed reaction to the government’s latest real property tax amnesty, acknowledging that it is rewarding delinquent taxpayers amid the “desperate” hunt for revenues.
David Morley, Morley Realty’s principal, told Tribune Business that it seemed unfair to write-off 50 percent of the taxes and penalty surcharges owed by real property tax defaulters while at the same time failing to reward companies and individuals who have always been current with their payments.
Pointing out that the extent of the waiver exceeded the ten percent “credit” to next year’s property tax bill that those paying on time receive, Mr Morley questioned the wisdom of a tax amnesty that effectively rewards tax dodgers and deadbeats who face no consequence if they come forward.
“You’ve got to be fair and reasonable to all concerned,” he told this newspaper upon hearing the details of the Prime Minister’s announcement. “While that’s an incentive for those who are delinquent to reduce and make good on what is owed, what about equally rewarding those who pay in full and on time?
“Why do we all live in fear of real property tax, but those in arrears get benefits and concessions?.... I’m always in for fairness. At the end of the day, I know the Government is desperate to get money, but what credit do compliant taxpayers get aside from a 10 percent credit if they pay their real property tax by March every year.
“Whatever discount you are giving to those who are delinquent, you should give better rewards to those persons who pay on time. My father told me you reward those for good behaviour, and discipline those guilty of bad behaviour,” Mr Morley added. “I don’t think it’s fair for those who have paid, and continue to pay each year, not to have equal rewards for what they’ve done. I’m only asking for equal treatment. They’re rewarding delinquent people more than those in good standing, and who continue in good standing. You can’t win for losing.”
The Government has staged several real property tax amnesties and waivers over the years, and the frequency with which they happen means delinquent taxpayers can simply let their arrears build up confident in the expectation that they at some stage will have the chance to write at least a portion off.
The Auditor General’s audit of the Government’s finances for the 2017-2018 fiscal revealed that unpaid real property tax arrears have now breached the $600m mark, while 40 percent of bills never reached the intended taxpayer because of incorrect mailing addresses. Against this backdrop, Dr Hubert Minnis acknowledged the collection and compliance challenges, together with “a substantial backlog of real property tax arrears spanning many administrations”, but moved to generate some badly-needed revenues while also relieving the burden on households and business owners.
“My government understands the challenges faced by families and business owners, which have been exacerbated by the COVID-19 economic downturn,” the Prime Minister said. “To ease the burden on persons and to provide them with some measure of relief, Cabinet has approved a real property tax forgiveness programme that will provide substantial discounts on arrears.”
The initiative, accessible to only Bahamian property owners, will see the Government waive up to 50 percent of a taxpayer’s total arrears, including overdue taxes and accumulated surcharges, if the full remaining 50 percent balance is paid by May 31, 2021. Arrears have to be outstanding for more than 180 days.
Alternatively, those who make a 25 percent “downpayment” on their arrears and enter into a payment plan for the balance will see all penalty surcharges waived if they do so by May 31, 2021. Again, the arrears have to be outstanding for 180 days or more. Mike Lightbourn, Coldwell Banker Lightbourn Realty’s president, said the $600m in outstanding real property taxes was “a good place to start” for a government increasingly desperate for revenue amid COVID-19’s economic fall-out.
“It’s always good to have these incentives,” he told this newspaper. “The Government needs money to come in. The Government is so desperate for cash they have to be creative. Some people are not able to pay. That’s a worry. Most people are on tight budgets. “If there’s an incentive to save on overdue debt they’ll do so. These are difficult times and we need to be creative. There’s $600m in real property tax arrears and that’s a good place to start with incentives to pay up.”
Mario Carey, the Better Homes and Gardens Real Estate MCR Group Bahamas principal, told Tribune Business that while he backed the waiver the Government needed to set a deadline for imposing sanctions on those who still refused to come in to pay their real property tax bills.
Elsewhere, Dr Minnis pledged that the Government is “fast tracking efforts to create a digital land registry” - an idea that has been talked about for a long time and will take years to come into full effect. “This will make title searches faster and less costly,” he added.
The Prime Minister added that efforts to improve the real property tax roll and database will soon be completed, and said: “These upgrades will allow for better synchronisation between the real property tax unit and Department of Inland Revenue and the Registrar General’s Land Registry.
“For the average Bahamian or investor, no longer will you have to wait weeks and pay high fees to investigate the amount of taxes owed on a piece of property you wish to buy or sell.”