Bill to Amend Property Tax Act Passed

A Bill to amend the Property Tax Act, to simplify the method for the calculation and payment of property tax so as to achieve increased compliance, was passed today (March 20) during the sitting of the Senate.
The Bill, which was piloted by Minister without Portfolio in the Ministry of Finance and the Public Service, Senator Dwight Nelson, seeks to make permanent, the rate of property tax, which was introduced in 2005 under the provisional Collection of Tax Act. This rate, which has simplified the calculation process, provides for a threshold of $300,000; a flat rate of $600 to be paid on values up to that threshold; and a rate of 0.5 per cent on any amount of value in excess of $300,000.
Senator Nelson explained that in 2002, the existing property tax rates for unimproved lands were modified due to the clear and significant increases in property value. The taxpayers, he said, reacted negatively to those rates, which were introduced and in response to this negative reaction, the Government in 2003, put another property tax regime in place to provide relief by way of a provisional tax liability, whereby the property tax was capped based on 11 value bands.
He informed that although there was a certain amount of relief to many taxpayers based on the cap and the value bands “that system was far from being considerable equitable.”
“For example, property valued at $2.5 million would be liable to pay property tax of $4,000, but if the property was valued at $2.5 million and one dollar the tax would move from $4,000 to $11,000. Property valued at $5 million would be liable for property tax of $11,000 while property valued at $5 million and one dollar would be liable for property tax of $87,000,” Senator Nelson said. “This one dollar difference created a difference in property tax, which was to put it simply, burdensome,” he noted. In 2005, Ministry Paper number 25 was introduced to provide for the removal of the value bands and caps and the introduction of a more simplified system. Senator Nelson said this change led to an increase in property tax compliance over the last three years.”The taxes collected from April 2005 to March 2006 were $1.47 billion. The amount collected from April 2006 to March 2007 was $1.8 billion and the property tax collected from April 2007 to January 2008 is $1.49 billion,” he informed.