The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian realtor says the Government should focus on collecting the estimated $600m in outstanding real property taxes rather than increase rates, and warned: “Don’t put a damper on a good thing.”

James Bernard, president of the newly-named Berkshire Hathaway HomeServices Bahamas Real Estate, told Tribune Business that the focus needed to be placed on compliance and enforcement as there appeared to be no consequences for persons who failed to pay due tax liabilities.

“I don’t think they should increase property tax rates,” he said. “It would put a damper on a good thing. What they should do is collect the outstanding property taxes owed currently. A big problem is people not paying property tax, and there doesn’t seem to be any repercussions for it. They’d be better off pursuing what’s owed currently than increasing taxes.”

The current boom in high-end properties valued at $1.5m and upwards has sparked debate on whether The Bahamas should seek to exploit the present “hot market” by increasing real property tax rates, as well as removing the $60,000 cap, on multi-million homes owned by wealthy persons who can afford to pay more.

Those in favour of this argue that there is sufficient scope to make the real property tax regime more progressive, and related to ability to pay, by increasing rates on homes in areas such as Lyford Cay, Albany, Old Fort Bay, Ocean Club Estates and other gated communities throughout The Bahamas. The Progressive Liberal Party (PLP), in its election “blueprint”, promises to make such properties pay “their fair share”.

The Government tentatively seemed to agree by raising the VAT rate on the proportion of real estate transactions valued at over $2m to 12 percent in the recent Budget. Yet many realtors and others are arguing that increasing rates would undermine investor confidence and the present sales surge, costing The Bahamas potential taxes, jobs and spending activity by wealthy homeowners.

They assert that the Government should instead focus on enforcement especially given that the Auditor General has identified that some $600m in outstanding real property tax is owed to the Public Treasury.

The Government’s recently-published full-year and fourth quarter fiscal “snapshot” revealed that the recently-closed “amnesty” initiative had gained some $27.6m in unpaid arrears from previous real property tax delinquents, although it made no mention as to how much was written-off or adjusted as a result.

“Taxes on property improved by an estimated $44.4m to $143.5m, and represented 136.9 percent of budget,” the report said of the 2020-2021 fiscal year. “This outcome included an additional $27.6m in collections from the government’s real property tax forgiveness programme to reduce outstanding arrears.

“The programme sought to boost the collection of outstanding property taxes by incentivising property owners, many of whom have been adversely impacted by the COVID-19 pandemic, to become compliant.”