The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Top realtors have urged the Government to cut Stamp Duty rates to 6 per cent “across the board” in order to have a “wow impact” in stimulating the housing market and wider Bahamian economy.

Suggesting that the Christie administration cut all property sale-related Stamp Duty rates to this percentage threshold for just a two-year period, Mario Carey, head of Mario Carey Realty, said taking such a specific action had been a prominent “table talk” topic among Bahamian realtors and developers.

Agreeing that the Government needed revenue to help work itself of its fiscal predicament, Mr Carey said cutting Stamp Duty rates to 6 per cent for a defined period would give buyers an ‘urgency’ to close deals, benefiting not just his profession but associated sectors such as banking and construction.

Increased government revenues would likely result from greater real estate activity, Mr Carey added, with employment levels also set to benefit, based on the US ‘yardstick’ that every house sale creates three jobs.

Backing the Government’s intention to go after ‘low hanging fruit’ on the revenue front, Mr Carey told Tribune Business: “Real property tax is one, Stamp Duty is another. They can still lower that and create more business.”

While the Bahamian real estate industry was “appreciative” of the Christie administration’s decision to reduce the top Stamp Duty rate from 12 per cent to 10 per cent for properties valued at over $250,000, the well-known realtor added his voice to those suggesting that lower rates could generate greater revenue yields for the Government.

“There should be some short-term policy changes to have a wow impact and stimulate the economy,” Mr Carey told Tribune Business.

“At least on the Stamp Duty side, bring it down across the board to 6 per cent, no matter what the purchase price is. That will really impact a lot of people in the market.

“That’s really what the table talk has been among a lot of realtors and developers,” he added of the 6 per cent Stamp Duty proposal.

“I’ve been hearing that quite a bit. Why that number? Is it a level of tolerance, interest rates being so high.”

Mr Carey recommended that the Government only implement a 6 per cent “across the board” Stamp Duty rate for a maximum two year period if it chose to adopt such suggestions.

Yet he felt such a move would “create some money, create some jobs - every house sold creates three jobs. Let the banks lower their rates.

“Real estate does not get the respect it deserves. Every economy looks at real estate as a barometer of their economy. No country lives without it.”

Mr Carey was backed by Ryan Knowles, a realtor with H. G. Christie, who told Tribune Business that he would have cut the top Stamp Duty rate to 6 per cent had he been in charge of government policy.

Suggesting that this would have narrowed the competitive advantage enjoyed by rival Caribbean destinations when it came to real estate transactions costs, Mr Knowles said the top rate’s cut from 12 per cent to 10 per cent “didn’t hurt”, but had not acted as a housing market stimulus.

“I don’t think it hurt, but I don’t think anyone made a purchasing decision on the rate coming down,” Mr Knowles told Tribune Business.

“It was the right thing to do, but if it was me I would have cut it in half. That would have made an impact, cutting it to 6 per cent.

“Look at places like Puerto Rico, Turks & caicos. Their transfer tax is very low. The cost of acquiring property there is a fraction of the cost here.”

He added: “We’re attractive for other reasons. Those places many not have our US proximity, but if you look at the cost of acquiring properties they have a competitive advantage.”

When Stamp Duty, together with the normal 6 per cent realtor’s commission and legal fees equivalent to 2.5 per cent of the purchase price, were added together, Mr Knowles told Tribune Business that taxes and fees were “consistently over 20 per cent of the cost of the transaction”.

He said: “You’re paying taxes on your fees, which doesn’t make any sense, but these are the rules we must play by. This is how we met the system.”