Finance Minister Colm Imbert presenting the 2023-24 national budget ro Parliament told legislators that the government has always ensured that the non-energy tax structure meet international best practice.
“To that end, we have consistently reformed our income, corporate tax structures, and value-added taxes. Our efforts are aimed at strengthening our domestic tax base and improving domestic resource mobilization to meet our current and developmental needs.
“Our new addition, the property tax, which has replaced land and building taxes suspended in 2010 and now fully repealed, will continue the tax modernization process.“We will now have a core mix of domestic taxes appropriate to the demands of our country. In this context, I wish to advise that the collection of property taxes will be effective in the financial year 2024,” Imbert told legislators.
He said that upon proclamation and operationalisation of the relevant sections of the local government legislation, residential taxes will be collected by the two cities, five boroughs and seven corporations to benefit citizens within the 14 municipalities.
“We are at an advanced stage of operationalizing the property tax regime and bringing Trinidad and Tobago into the modern era. Our Valuation Division, with enhanced resources, has already crossed the 50 per cent threshold of residential properties required to give effect to the population of the valuation roll.
“Therefore, I am confirming today that in accordance with the law, I have received the residential property valuation roll for Trinidad and Tobago. This valuation roll will now be sent to the Inland Revenue Division, which will set in motion the procedural framework for collecting residential property taxes in the first instance.”
Imbert said that this will provide local government bodies with a new and sustainable revenue stream to be used for procuring goods and services and/or their development programmes, and not for personnel expenditure.
He said legislative amendments will be made in due course to ensure that this money is not used for the wrong purpose.
“In this regard, since this is a new paradigm, and the collection of property tax will take some time to ramp up, I have created a new sub-item for the proceeds of property tax in the goods and services line item in the allocations for Municipal Corporations and allocated additional appropriate sums of money for each of the 14 Municipal Corporations, in the first instance, depending on their population size, ranging from eight million to TT$12 million (One TT dollar=US$0.16 cents), Imbert said.
He said that the sums will be suitably increased during the mid-year review if the collection rate of property taxes exceeds expectations.
Imbert told Parliament that it must be emphasised that property taxes are easily calculated but subject to extensive narratives of knowingly false claims, misinformation anddisinformation.
He said in making false representations about the property tax levels that most citizens will be required to pay, our opponents consistently and deliberately confuse capital values with rental values to make property taxes appear onerous.
“Let me make it demonstrably clear. The base for calculating property taxes is the annual rental values of relevant properties; for example, in the first step, the Valuation Division has established and continues to establish annual rental values for our national property portfolio, which comprises 600,000 properties of which, 400,000 are residential; 49,000 are commercial; 3,000 are industrial; and 148,000 are agricultural.”
Imbert said that in the second step, the Board of Inland Revenue (BIR) will calculate the property taxes based on annual rental values discounted by 10 per cent with an application of three per cent of the discounted annual rental values.
The Finance Minister said, for example, with an annual rental value of TT$24,000, the property tax will be TT$54 per month being TT$24,000 minus TT$2400 which will equal TT$21,600 multiplied by three per cent. This simple calculation will generate a tax of TT$648 per annum or TT$54 per month.
Imbert said that based on the progress in the compilation of the valuation roll, he expects that at least 50 per cent of all residential properties, and quite likely more than 50 per cent, will pay property taxes somewhere between TT$540 and TT$1,080 annually.
“Moreover, for the lowest possible value which would be placed on a residence , TT$18,000 or less , the property tax will be approximately TT$41 per month. On the other hand, if someone owns a property which could rent for TT$3,000 a month or TT$36,000 per year, the property tax on that type of property will be TT$81 per month or TT$972 per annum.”
He said for more significant and larger properties that rent for TT$10,000 per month, the property tax would be TT$3,000 per annum or TT$250 per month, which is quite affordable for owners of properties in that higher range. (CMC)
