The Tribune

• Chamber chief hails ‘removal of fear’

• Halkitis pledges move ‘not on table’

• Gov’t merely in data gathering mode

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Cabinet minister yesterday “removed the fear” of many Family Islanders that real property tax was about to be levied on Bahamian-owned properties by pledging “authoritatively it will not happen”.

Daphne Degregory-Miaoulis, Abaco’s Chamber of Commerce president, told Tribune Business that Out Island residents and businesses now have “a clear and definitive picture” of the Government’s intentions after Michael Halkitis, minister of economic affairs, asserted that the tax’s introduction is “not on the table” with respect to locally-owned real estate.

Responding to concerns voiced in yesterday’s Tribune Business, Mr Halkitis told the Senate during the mid-year Budget debate: “Bahamians do not pay property tax in the Family Islands. That is the way it will continue to be. There is no decision by the Government to impose property tax in the Family Islands. It has not been raised, it has not been discussed, it has not been debated. It will not happen. I hope I am clear enough.”

Mr Halkitis responded after he confirmed that this newspaper’s article had attracted significant readership, including online and across social media. Mrs Degregory-Miaoulis had revealed she and others were bracing for the “inevitability” of real property tax being levied on Bahamian-owned property in the Family Islands and an end to the decades-old waiver that had exempted such assets from the levy.

She based her concerns on the Government’s requirement that all Family Island land parcels and properties register for real property tax purposes and obtain an assessment number. Failing to do so has already prevented real estate sales from closing because they cannot be stamped for VAT purposes, and recorded in the Registry of Records, without completing this process.

In the absence of clarity from the Government, and an explanation as to why it was mandating this, Mrs Degregory-Miaoulis said it was only logical to believe it would not go to such lengths unless there were plans to extend real property tax to all Family Island real estate, not just that owned by foreigners.

Mr Halkitis, though, emphatically dismissed such concerns. He said the Department of Inland Revenue was undertaking the assessment number and registration drive “to improve the data” it possesses, including being better able to identify foreign-owned property that is not on the tax roll and/or failing to pay.

“Every property will have an assessment number,” the minister said. “Because they have an assessment number it does not mean we intend to tax. It’s an effort to improve the data we have at our disposal...... Bahamians in the Family Islands, do not mistake the efforts of the Government to collect information as a desire to impose taxes on Bahamians in the Family Islands. It has not come up, has not been discussed, and I can say authoritatively it will not happen.”

Just in case anyone failed to get the message, Mr Halkitis repeated it in closing the Senate’s mid-year Budget debate. “It’s not happening,” he reiterated of imposing real property tax on Bahamian-owned property in the Family Islands. “It’s not the intent of the Government. We’re not discussing it. It’s not on the table. It will not happen.”

Uttering a sigh of relief, responded to the minister’s remarks by telling Tribune Business: “I’m very happy to hear that and be reassured about that as I’m sure are all Bahamians in the Family Islands.” However, she called on the Government to provide more time for residents and businesses to obtain real property tax assessment numbers so that the closing of real estate-related transactions is not delayed by waiting for them.

“I feel that the timeframe for obtaining an assessment number as a requirement for sales and transactions to be processed is really proving a challenge,” said Mrs Degregory-Miaoulis. “Perhaps the timeline on that could be more lenient. I’m also happy to hear that there are no property taxes in the foreseeable future for the Family Islands because we like to think not being taxed acts as an incentive for Bahamians to return to the Family Islands and show confidence by investing.

“Some of our wonderful Bahamian-owned businesses in New Providence might take this opportunity to invest in a smaller branch in the Family Islands and show that vote of confidence and encourage more investment.” Mrs Degregory-Miaoulis said imposing real property tax on Bahamian-owned properties in the Family Islands “would have removed that incentive for Bahamians to return home and created an even higher-cost destination.

“We have an overcrowded New Providence, and I know the Government has been putting a lot of emphasis on expanding tourism to the Family Islands,” she added. “It stands to reason that no taxation for Bahamians provides an incentive for Bahamians to further invest in the Family Islands when new opportunities present themselves”

Pointing out that the assessment number and registration requirement “most certainly gave that impression” that real property tax was coming for Bahamian-owned property in the Family Islands, Mrs Degregory-Miaoulis said of Mr Halkitis’ statements: “It takes that fear away that people would otherwise have. I think it’s very important that we have a clear and definitive picture as to what to expect or not expect for the future. It’s removed that fear, so I’m happy with that.”

Others, though, were not so sure. One source, speaking on condition of anonymity, said: “Why are they pushing so hard to get properties registered? Why are they pushing so hard to do their homework and estimate what the tax could be? It means their records are sub-standard; they just don’t have the information.”

There also appears to be a disconnect between the numbers. The Prime Minister during last May’s Budget debate said the Government’s total annual real property tax billings are worth a collective $280m - representing monies billed to taxpayers, but not necessarily collected. However, the latest Fiscal Strategy Report projects that the Government will collect $554.5m within four years by the 2026-2027 fiscal year.

This means that collections would have to almost double, or rise by near 100 percent, compared to current billings. The only obvious ways to achieve such an increase would be to raise property tax rates or broaden the base by eliminating existing carve-outs and waivers such as the exemption for Bahamian-owned property in the Family Islands.

Yet given that the threshold below which no real property tax is paid was raised to $300,000 in last May’s Budget, many Family Islanders will likely still pay zero even if it is imposed. But its introduction could force Bahamian landowners, who have sat on their Family Island holdings for years because there are no carrying costs, to finally use them for productive economic development purposes.

Tribune Business reported earlier this year that Family Island property owners have been receiving real property tax bills and assessment numbers, albeit a zero balance was shown as owing because the levy has not come into effect. The Government is also presently extending the Tyler Technologies valuation and mapping exercise - previously conducted on New Providence - to other Bahamian islands.

Another possible option for increasing real property tax revenues would be to eliminate the waivers that The Bahamas’ largest taxpayers - the hotel industry - currently enjoy as part of their incentives deals under the Hotels Encouragement Act.