The Tribune

By NEIL HARTNELL Tribune Business Editor REAL property tax compliance is "higher than in the past, that's for sure", a government minister telling Tribune Business yesterday that new administration/enforcement measures would "yield" improved collection results Acknowledging that there had been "reluctance" on the Government's part in the past to enforce real property tax collections, Zhivargo Laing, minister of state for finance, hinted that prospects were slim for recovering the $400 million-plus sum that, according to the Auditor-General, is past due every year and growing annually. "That's been a sum of money that extends out over 20, 30, 40 years, whatever number of years," Mr Laing said of the $400 million-plus, essentially indicating that the Government has written off a substantial sum from, if not all, this amount. The Government, though, appears to be taking steps to ensure it now collects all that it is due. Mr Laing said the recent announcement by the Ministry of Finance's Business Licence/Valuation Unit meant that all Bahamian companies who owned their own real estate would not be certified as being in compliance with their annual Business Licence Tax unless fully compliant with real property tax payments. Although Business Licences are no longer being renewed annually, due to the amendments enshrined in the latest version of the Act, Bahamian companies still have to submit their annual financial results to the Business Licence/Valuation Unit, along with the due Business Licence Tax based on that, by March 31, 2012. Mr Laing explained that businesses will be deemed non-compliant with the Business Licence Act, and will not receive a Business Tax Compliance Receipt, unless they have either paid - or agreed a payment plan to pay - all current and past real property tax due on properties they own, and occupy. "We're not re-issuing Business Licences under the Act," Mr Laing told Tribune Business. "Businesses are assessed for their Business Licence Tax, for their real property tax, under the requirements of those respective laws. People who have had their licence issued already have to comply with the Business Licence Act, and where they are in arrears they have to settle them. "When you come in they will check to see to what extent you are in compliance with real property tax, as the law requires, and reflect that in whatever receipt you are given....... The licence is issued, you pay your tax. If you are deemed to be non-compliant, then the Secretary for Revenue knows how to deal with that. He can suspend the licence, revoke the licence........ "The expectation is that you pay your taxes. If you don't, the Secretary of Revenue has options as to what he can do with respect to that. The Business Licence people are technically more capable of knowing what the precise issues are with compliance, non-compliance." The Government's 2011-2012 Budget estimates show it expects to collect $60.7 million in real property tax from Bahamian businesses this fiscal year, a $3 million reduction from the $63.7 million forecasted in 2010-2011. The former figure, though, still represents a major improvement on the $48.436 million and $50.893 million in real property taxes estimated to have been collected from Bahamian businesses in 2008-2009 and 2009-2010, respectively. It is not known how much of the 2011-2012 figure is expected to come from the new compliance initiative. The move is clearly designed to foster greater real property tax compliance by Bahamas-based companies, and more timely payments that will improve the Government's cash flow. The Ingraham administration is eager to lay its hands on every cent due to it, given this nation's current fiscal predicament, and given that the Business Licence /Valuation Unit is responsible for collecting both real property taxes and Business Licence tax, it is perfectly placed to use compliance with the latter as a 'hook' to collect the former. Mr Laing said the "best result" would be for Bahamian companies who knew they owed real property taxes to come in to the Business Licence/Valuation Unit and agree a settlement plan. "For some people, paying all up front is impossible, so sitting down with the real property tax people and working out some arrangement for the taxpayer's benefit is the best way of doing it, rather than harsh measures to comply," the minister added. Although unable to provide any statistics on how compliant the Bahamian private sector was when it came to real property tax payments, Mr Laing admitted to Tribune Business that the Government had not in the past moved as aggressively as it could to collect all that was due. "On the real property tax side, the Revenue Secretary has options with respect to non-compliance," the minister added. "Whereas there was some reluctance in the past on enforcement, certain measures can be taken to deal with that." All such measures would be taken "under the law that governs" real property tax and Business Licences respectively. Asked about current real property tax compliance rates in the Bahamas, Mr Laing told Tribune Business they were "higher than in the past, that's for sure. When you take account of the environment we're in, and allow for that, the compliance is higher than it has been, arising out of some of the initiatives we've taken, such as eliminating the penalty surcharge on past due amounts". The minister added that the new, centralised Tax Administration Division within the Ministry of Finance was also intended to boost real property tax collections. Access to a central database would facilitate "better information sharing among revenue collectors". "It will help to bring people into compliance," Mr Laing said. "You can track people better. In the first instance, you will know something is outstanding on this side, notwithstanding the application for a licence on the other side."