By Vernon Daley, Staff ReporterVERY LARGE landowners will see increases in their property taxes when the new financial year begins in April.
Finance and Planning Minister, Dr. Omar Davies told the House on Tuesday that Government had approved revisions to the tax liability for the 2,425 properties valued between $10 million and $50 million and the seven properties valued at $200 million and over.
During the 2002/03 financial year, landowners in the $10 million to $50 million value band, paid up to $170,000 in property taxes. This will move to $320,000. Those who own property valued $200 million and above will see the taxes in their band move from a high of $3 million to a high of $4 million.
The Minister explained that the adjustments for the two bands were necessary, because "a review of the existing structure revealed that there is a level of inequity when compared to the taxes imposed in other value bands."
At 100 per cent compliance, the adjustments will earn the Government about $570 million in the next financial year, up from $366 million an increase of $203 million.
Last year the Government moved to improve the property tax system by introducing 11 value bands. Properties valued at up to $200,000 are at one end of the scale and those valued at $200 million and over at the other end.
The introduction of the system was devised against the background of widespread public confusion and anger over new property taxes, linked to a valuation exercise carried out by the National Land Agency last year. The exercise saw property values moving to $524 billion in 2002 from $76.4 billion in 1992 the previous time a valuation was done.
"I have come to the conclusion that the machinery is still not adequate to deal efficiently with the introduction of a new rate structure," the Minister told the House, noting that Cabinet had decided to continue with the system. "It is envisaged that with improvements in the system...the compliance rate should improve, thus increasing revenue without instituting newer rates for the coming fiscal year."
He said, however, that as part of efforts to improve the system, there will be annual adjustments of property valuations starting in 2004/2005. This, he said, will allow for a more realistic linkage between the tax revenues collected and the cost of providing local services, such as street lighting and garbage collection. The law currently requires property valuations to be done every five years.
Meanwhile, the Dr. Davies disclosed that there has been a $300 million shortfall in the Government's projected intake from property taxes for 2002/2003.
He said projections were that $1.1 billion would have been raked in at a 65 per cent compliance rate. However, this is likely to end up at $800 million when the financial year ends.
With local services costing about $1.7 billion, the Minister said the Government would have to fork out about $875 million to help defray the cost of providing such services.
