IMF tar­gets prop­erty taxes

Jamaica Gleaner - - SOCIAL SOMETHING EXTRA - Jo­van.john­son@glean­erjm.com

ANEW prop­erty tax sys­tem to get rid of the trans­fer tax and stamp duty now charged are to go be­fore the Cab­i­net for ap­proval by De­cem­ber 31 as one of two new struc­tural bench­marks un­der Ja­maica’s four-year loan pro­gramme with the In­ter­na­tional Mone­tary Fund (IMF).

The IMF rea­soned in its lat­est coun­try re­port on Ja­maica’s eco­nomic re­form pro­gramme that “there is scope to strengthen the prop­erty tax sys­tem and phase out the dis­tor­tionary stamp duty and as­set trans­fer tax”.

Ac­cord­ing to the fund, the an­nual prop­erty tax yielded on av­er­age about 0.4 per cent of gross do­mes­tic prod­uct over the last three years, well be­low the av­er­age yield of 0.8 per cent in other emerg­ing mar­kets.

“The au­thor­i­ties,” the IMF said “are ex­am­in­ing how to strengthen prop­erty taxes, which are shown to be more pro­gres­sive and ef­fi­cient. In this re­gard, new and re­cal­i­brated prop­erty tax rates and bands will be submitted to Cab­i­net by end De­cem­ber. The higher yields from prop­erty taxes could pro­vide room to re­place the more dis­tor­tionary stamp duty and trans­fer tax.”

IN­HER­ITED FROM GREAT BRI­TAIN

Al­most a year ago when it came out against the old taxes in­her­ited from Great Bri­tain, the IMF said “dis­tortive” taxes such as trans­fer taxes and stamp duty should be phased out in favour of a cap­i­tal gains tax.

The IMF ar­gued that “taxes on gross as­set val­ues such as the trans­fer tax and the ad val­orem stamp duty are highly dis­tortive, dis­cour­age prof­itable trans­ac­tions, and en­cour­age in­for­mal own­er­ship, all of which are drags on growth”.

Cur­rently, no cap­i­tal gains tax is levied in Ja­maica. How­ever, cap­i­tal gains earned from sell­ing prop­erty that are con­sid­ered busi­ness in­come may be sub­ject to in­come tax.

Ac­cord­ing to Tax Ad­min­is­tra­tion Ja­maica (TAJ), doc­u­ments are stamped as proof of the pay­ment of stamp duty and/or trans­fer tax and to make them le­gal and bind­ing.

Trans­fer tax, mean­while, is as­sessed and paid by per­sons trans­fer­ring real prop­er­ties such as land or shares and/or trans­fer­ring prop­erty on death. In the case of trans­fer of land, the tax is paid by the seller on the mar­ket or ap­praised value.

DI­A­LOGUE WITH STAKE­HOLD­ERS

Speak­ing in the House of Rep­re­sen­ta­tives yes­ter­day, Dr Peter Phillips, op­po­si­tion spokesman on fi­nance, urged the Gov­ern­ment to have di­a­logue with stake­hold­ers be­fore sign­ing off on any pro­posal. The Gov­ern­ment has strug­gled over the years to col­lect prop­erty taxes and has re­sorted to cre­ative means, in­clud­ing set­ting up an in­cen­tive­based sys­tem.

Ear­lier this year, the Au­di­tor Gen­eral’s De­part­ment re­ported that over the fi­nan­cial years 2011-12 to 2015-16, prop­erty tax to­talling $3.26 bil­lion had to be writ­ten off and $13.5 bil­lion re­mained out­stand­ing.

The value of prop­erty tax col­lected in­creased by al­most three times to $6.5 bil­lion in the last fi­nan­cial year from $2.5 bil­lion in 2011-12.

The other new struc­tural bench­mark in­volves the ap­proval of the new or­gan­i­sa­tional struc­ture of the Ac­coun­tant Gen­eral’s De­part­ment to be con­cluded by Septem­ber and the de­vel­op­ment of a train­ing pro­gramme by Jan­uary 31, 2017.

Newspapers in English

Newspapers from Jamaica

© PressReader. All rights reserved.