Address of Chief Minister on the Property Tax Issue (August 15, 2016)
Over the past week there have been many expressions of outrage throughout Anguilla regarding the generation of the new property tax bills. Much of this outrage may be justifiable --- because even though the consultation on property tax has been extensive the impact of the changes caught most persons by surprise.
However, in order to meet agreed targets in the budget --- the new property tax assessments had to be sent out. It was therefore understood that the implementation process would not be perfect --- but aggrieved persons would be able to come in to discuss their particular situation/concerns with Management and eventually the Valuation Review Board.
We as the Government must take the blame for many of the concerns that were raised. Efforts to make the property tax system more equitable --- has been an undertaking of several Governments over the past sixteen years beginning with the creation of a separate department for Inland Revenue collection. You will recall that a task force was also setup in 2000 to make sure that all properties were assessed and that property owners were paying their fair share of this tax measure.
It remains unfair to dutiful taxpayers that they pay while other persons refuse to pay and are in no way adequately penalized for not doing so. Property tax is neither a new nor an uncommon tax in Anguilla; in the region or indeed the rest of the world. It is a form of commitment that every citizen makes to his/her country. In Anguilla’s case the system had fallen behind that of other OECS countries, including Montserrat, which has less than half our population and housing stock.
In furthering that project the past Government engaged a Canadian Consultancy Firm. That Property Tax Consultancy that has been going on in Anguilla since 2013 ---- culminated in these new assessments. In speaking to this issue, the former Comptroller of Inland Revenue, Mrs. Gecheal Richardson, in an article in the Anguillian on January 11, 2013 made the following statement:
“The reform does not speak to tax rate increases (alone). It speaks to modernizing the legislation, putting in more enforcement so that there can be higher compliance …. this is because if you are paying, you would expect that everybody is doing their share.”
Mrs. Richardson was asked this question because in 2011 there was an “across the board” increase in property tax in Anguilla of 150%. The interviewer from The Anguillian at that time wanted to know whether the consultancy would be strictly dealing with further increasing the tax rate. She was therefore explaining that there was need for equity and fairness in the system and the goal of the consultancy was to achieve that as well.
The concerns that have been expressed since taxpayers have received their bills have been varied. Again Government must take the blame for not explaining its intentions surrounding this present billing exercise. Let me highlight a few concerns that have come to our attention --- and respond to them accordingly.
Firstly, the bills were not intended to attract any penalties for late payment in 2016. In other words, because these bills were sent out late --- Government will not penalize anyone for not meeting the deadline/due date. In fact persons who pay their installments before the due date may be entitled to up to 20% discount depending upon their circumstances. Because this incentive was not finalized in time for the implementation --- persons who have already paid their bills will receive a credit on their account for 2017 or some other arrangement negotiated with the department.
Secondly, a number of persons have expressed that their bills have increased considerably. There will be such cases for different reasons. However, anyone who believes that his/her bill has been outrageously increased has the opportunity to come in to discuss the matter to determine whether there has been an error or for Management to explain the assessment.
The system is a work in progress --- it is not perfect. The emphasis is on fairness. But we also want to address the situation of the individual taxpayer who is willing to pay --- but may require some relief. Compassion must be the key word in such genuine circumstances.
Thirdly, there are a number of persons who are complaining that their bills are high. But, in fact, in many cases, it is because their arrears have been added to their bills. Naturally, if you have not paid your property tax for several years --- you still owe them. It still remains your obligation to pay them. There will be circumstances when you may be unable to pay. However, if you do not want your arrears to continue to accumulate you must come in and discuss the matter with the Inland Revenue Department --- as you would in the case of anyone to whom you owe money. Again compassion is the key word here.
It is not a disgrace (REPEAT) to be out of work or to have a struggling business. So we will provide a further incentive to those willing taxpayers who have fallen on hard times --- let me publicize at least one of those proposed incentives. For persons with arrears, during the next twelve months we will forgive both interest and penalties on their outstanding bills.
Fourthly, there are a number of retired persons living on fixed incomes who may be affected --- if their tax bill has been increased. The new property tax system is scientific --- so it cannot factor-in special circumstances. That is the work for the management of the Inland Revenue Department. It has powers within the legislation to address such matters. Of course the Ministry and the Government may also be called into that process. I have spoken to a number of persons who have been so affected. There are genuine cases. Again the key word here is compassion.
Fifthly, the question has been asked: Why at this time? Truth be told, no time is the right time to face an increase in your tax bill. However, every time is the right time to bring equity and fairness into a tax system. Government has determined that it is better to put the process in place --- and then deal with the anomalies rather than postpone and prolong a process that has being going on for over 16 years.
Finally, a number of persons are of the view that everyone has had a considerable increase. Let me give you some numbers.
4894 properties were put into the system with a total of 5641 buildings. (The total property value EC $4,074,000,000)
The total property tax assessed: EC $12,056,000
The expected yield at 75% percent compliance for hotels and 50% for all other categories is E.C. $6,650,000.
The total arrears put in the system and on present bills is: EC $8,900,000.
Here are some other interesting numbers:
59% of tax payers have increases of less than 50%
78% of tax payers have less than 100% increase.
22% of taxpayers have increases more than 100%
271 persons are paying less than before.
Those property owners that have over 100% increases may be as a result of error; increases in the size of buildings during the survey period; large beachfront hotel and villa properties; etc.
But there are a number of realities regarding the attitude of our citizens towards property tax that must be mentioned. It is not just against the current property tax assessment --- it is against the payment of the tax generally/as a whole. In fact certain influential persons in our community have been going on the radio and other media advising citizens not to pay their taxes. This is irresponsible behavior for persons who seek to be leaders of this country.
On the contrary, such influential persons, who know better, should be encouraging all citizens to pay their fair share of taxes --- especially if they are in a position to do so. They should also be expressing outrage that a number of persons are chronic non-payers who have not paid their taxes neither in good times are bad --- some for many years and some never at all.
They should be telling them that such conduct is unfair to those solid citizens who have paid their fair share at all times. And who have made sacrifices to do so. Our parents; grandparents; and great grandparents were exemplary in this regard. It is time for us as a nation aspiring to be “proud; strong and free” --- to cultivate practices and habits that will lead to that desirable outcome.
Let me also assure you that this Government and the past Government have spent a considerable amount of time and money working with the consultants and the technical staff in several ministries to arrive at a fair and equitable system. Fortunately, even though the system is scientific --- it makes room for dealing with special circumstances and error. It requires a management system that is both understanding and compassionate --- but it also requires every citizen/property owner to be fair and responsible.
As elected officials, my colleagues and I recognize the hardships that we all are facing at this time. Whatever tax measures are put in place we have to pay them as well. We accept the blame for any misunderstandings or errors caused by the implementation process. However, we urge you all to play your part in creating a culture where paying Government taxes becomes more than just an afterthought. The Inland Revenue Department and the Ministry of Finance is open to receiving and responding to all your concerns in these matters.
May God bless you all! And may God bless Anguilla!
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