The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Prime Minister’s Abaco representative yesterday pledged that “every measure is being taken” to resolve the “ludicrous” property tax bills undermining all Family Island economies.

James Albury, parliamentary secretary in the Prime Minister’s Office, said the Government readily conceded that the 2018 property valuations - and associated tax bills issued to foreign second home and real estate owners - were “inaccurate and unfair”.

Admitting that the Department of Inland Revenue had made a serious error, which had resulted in foreign investors receiving tax bills higher than the value of their property in many cases, Mr Albury blamed Nassau for the problem.

He said the inflated real estate valuations, and subsequent tax bills, had resulted “from a general exercise at a central level” that produced assessments which were wildly inconsistent with the true worth of property throughout the Family Islands- not just in Abaco.

Speaking after a meeting was held at the Prime Minister’s Office in Abaco to address the resulting backlash, Mr Albury promised to “do my utmost” to ensure the Ministry of Finance issued a statement that will “calm the market”. He admitted that “a lot of pain and uncertainty” has been caused by the unjustified tax hikes, which threaten to undermine a key driver of Abaco’s economy and “tear apart” its real estate market.

The Government’s proposed resolution is for foreign real estate owners to pay property taxes based on their 2017 billings, once they have filed a dispute with the Department of Inland Revenue over the amounts assessed for 2018.

For those who have already paid their inflated tax billings for this year, the Government is offering to apply the excess as a ‘credit’ to property tax payments in future years.

The proposal was outlined at yesterday’s meeting chaired by Gaynell Rolle, the Department of Inland Revenue’s Abaco under-secretary, with Mr Albury conceding that the Government “cannot undo mistakes that were made”.

He told Tribune Business: “This morning was to clear the air and make clear to legal representatives, and those in the property management and sales business, that the Government knows these appraisals are inaccurate and unfair, and every measure will be taken to now get this right.

“These persons given these new appraisals and bills are only going to be required to pay the previous year’s amount provided they file their disputes with the Department of Inland Revenue, which most of the persons in the room had done [on behalf of their clients].”

Among those attending yesterday’s meeting were Abaco-based realtors, appraisers and attorneys, the latter including the likes of Frederik Gottlieb and Dupuch & Turnquest’s Heather Hunt.

Mr Albury cited the example, revealed by Tribune Business last week, of a 91 year-old American whose Little Harbour property was valued at $1.4 million by the Department of Inland Revenue despite a private appraiser finding its true worth was only $62,000.

“There’s a number of them in Abaco who have very significant outstanding and, quite frankly, ludicrous values from the Department of Inland Revenue,” he conceded to Tribune Business.

“As stated by Gaynell Rolle, this was the result of a general exercise at a central level in Nassau, which resulted in a lot of inaccurate appraisals, and the Department is engaged in a reappraisal process to alleviate and resolve this issue.

“I wasn’t privy to these decisions. I believe they were made some time ago. They seem to have been made from a central, general assessment which did not accurately reflect the fair market values appraised by licensed Bahamas Real Estate Association (BREA) appraisers.”

A Tribune Business source present at the meeting was more blunt about the Department of Inland Revenue’s failings, suggesting it had overreached in its desire to boost real property tax revenues once it realised no Family Island appraisals had been conducted in the past decade.

“The goal is to improve the collection process, and somebody apparently pushed the button,” they said of the Government’s explanation. “They realised they hadn’t done an assessment for 10 years in the Out Islands.

“Some genius put a formula in the numbers, pushed the button and everyone got a new number. I think they’re a little embarrassed about the way it’s turned out.”

This error, which has created a potential crisis for foreign direct investment (FDI) and real estate in the Family Islands, again illustrates the difficulties the Government faces in trying to maximise real property tax revenues, crackdown on evasion and ensure equity/fairness between taxpayers.

The Department of Inland Revenue, grappling with an inadequate and incomplete property tax system, also lacks the manpower and knowledge required to properly assess values in the Family Islands and enforce collection.

Mr Albury, meanwhile, said he was “personally committed” to resolving the problems created by this year’s real property tax bills given the implications for Abaco’s second home market and broader economy.

“Here in Abaco, our tourism product is a little bit different,” he added. “Our second homeowners drive the economy a lot more than in other islands of the country. We have a very strong second home market, and I and others in the Government departments here understand that very well.

“This is why I’m determined to rectify this outstanding issue and show persons investing in Abaco and the country that we take this matter seriously, and ensure steps are being taken to rectify it. I will make sure we follow up to get this right.”

With Abaco realtors reporting that many of their clients are threatening to sell-up and leave as a result of receiving exorbitant property tax bills, Mr Albury promised to press for a statement from the Ministry of Finance to clarify the situation.

“What I stated today was I would to my utmost to make sure a general statement is issued, one formalised, so that the public can be notified and made aware of what measures are being taken so we calm the market, and those made nervous by appraisal values can know the steps being taken to rectify that,” the central and south Abaco MP told Tribune Business.

Mr Albury added that the Department of Inland Revenue’s errors had “led to a lot of pain and uncertainty” for the sector Abaco’s economy relies upon. 

“We can all appreciate the devastating effects frustration and uncertainty among second homeowners can have on us,” he told this meeting. “I can tell you I will do my personal utmost to see this corrected.

“Everyone is very aware now of the devastating effects this can have, and is having, because of the pain created..... I’m certain we’re taking the right steps now.

“Unfortunately, we cannot undo mistakes that were made, but we can try and be proactive at this point and correct them, and make sure as we move forward it doesn’t happen again,” Mr Albury continued.

“It’s very unfortunate we came to this position, and that it happened, but I can’t say this enough: I’m personally committed, and I know the staff here at the Ministry of Finance on the ground are committed, to getting this resolved.”