Lies, damn lies and property taxes
Even though Finance Minister Larry Howai might be considered a political novice, he was previously a corporate manager of many years experience. It is therefore difficult to excuse him for the utterly inept and maladroit way in which he chose to introduce (or reintroduce) into the public discussion the issue of the resumption of the property tax.
Mr Howai must have been aware of the furore which arose back in 2009 when the then PNM minister of finance, Karen Nunez-Tesheira, first proposed the replacement of the land and building tax regime and the introduction of the property tax. Indeed, the massive outcry against the PNM Property Tax proposal was one of the main symptoms of the collapse of the Manning regime.
In the face of this, Mr Howai’s announcement that he proposed to bring back the tax and that “the valuation system will be the same as the PNM’s,” was certain to cause an immediate conflagration. It did, and in the process gave us a marvellous example of how our politicians seek to spin webs of deception and downright lies.
Let us begin with Mr Howai himself who demonstrated that notwithstanding his status as a novice he is a quick learner as far as the art of speaking with a forked tongue is concerned. On the Saturday before the Budget presentation Mr Howai, as quoted above, indicated his intention to reintroduce the “Property Tax” with the “same valuation system as the PNM’s”.
One day after the budget his story had completely changed. Speaking to reporters at the Chamber of Industry and Commerce’s annual Post-Budget Forum, Mr Howai stated that “the new land and building tax regime will have a completely new valuation system from the one formulated by the People’s National Movement (PNM)” and that “Cabinet still needed to determine a valuation method”.
So within a matter of four days Mr Howai’s property tax had become a land and building tax and the PNM valuation system had disappeared, leaving nothing in its place. But we should not be too surprised at Mr Howai’s complete about-face for he undoubtedly must have felt the heat from the conflagration he himself had started.
Indeed the first person to fan the flames was the political leader of the COP, Prakash Ramadhar. Speaking at a media conference the day after Mr Howai’s first statement on the matter, Mr Ramadhar declared that: “If there is indeed a return to the People’s National Movement (PNM)-style property tax, the COP will take a very firm stand on it.”
He reminded the media that in 2009 the COP had led the protest against the PNM property tax proposal on two main grounds. The first was the proposed valuation methodology and the second was the fact that the tax was to be collected by the central government and placed in the consolidated fund instead of being disbursed to local government bodies for infrastructural development.
On the Tuesday after the budget the COP published a full-page advertisement entitled “Clarifying our position on property tax”. In the advertisement there was a subtle but important shift in the COP’s position.
The advertisement stated the COP believes citizens should be fairly taxed for land/building assets. “In 2009, we did not support the property tax structure based on present-day valuations proposed by the Manning-led PNM government.” There was no mention in the advertisement of COP’s opposition in 2009 to the taxes being collected by the central government and placed in the consolidated fund.
When they were in opposition they opposed the placement of the tax in the consolidated fund on the grounds that the PNM government was profligate and squandered taxpayers’ money on grandiose schemes. Now that they are part of the Government they quietly drop that as a ground for opposition, notwithstanding the fact that their partners in Government are possibly the most corrupt set of ministers this country has ever seen. I guess this is what Bhoe Tewarie meant when he said recently that the COP had to learn to compromise its principles.
But by far the most outrageous and glaring instance of double-speak and obfuscation over this property tax issue to date has come from our Prime Minister herself. Speaking to reporters after the budget presentation Mrs Persad-Bissessar declared,” I want to make it very clear that my Government will not introduce any property tax, there will be no property tax.”
She went on to assert that she had, in fact, “given instructions for a Bill to be drafted that will clearly take the land and building taxes as it was prior to 2010 before the law that was passed by the PNM for the property tax,” she said.
It is nothing but a base deception for the Prime Minister to speak as though, in principle, there was any difference between land and building taxes and property taxes. They are the same sort of tax. What distinguishes the one from the other is not the name but the rate of taxation and the assessable value of the property to be used.
Indeed our Prime Minister should be very aware that, as has recently been reiterated by Stephen Kangal, the tax rate of the old land and building tax regime was substantially higher than the tax rate in the Property Tax Act of 2009. Thus for the same assessable value of property people would be paying higher taxes under the land and building tax regime than under the Property Tax Act.
So that for this Government to say that they are going back to the land and building tax regime but they do not know what method of valuation will be used to determine the assessable value of properties is to put the country and property owners in exactly the same uncertain position they were in 2009 when the PNM proposed the use of the of Annual Rental Value (ARV) to determine the assessable value.
There is no question that the property tax should be reintroduced under whatever name. It is foolish to not secure such a source of revenue. But as in 2009 the two issues are still the same. A fair and transparent valuation system and clear assurance that the taxes so collected go directly to the provision of goods and services in the local areas.
Mr Howai could do himself a favour by ensuring that these two issues are openly and fully addressed in his future statements on this matter and leave the spinning of webs of deceit to those who have no other alternative.
—Michael Harris has been for many years a writer and commentator on politics and society in Trinidad and the wider Caribbean.