The Tribune

By Fay Simmons

Tribune Business Reporter

jsimmons@tribunemedia.net

The Ministry of Finance's top official yesterday disclosed that the Government is aiming to raise between $25m-$50m annually from selling real estate owned by property tax delinquents.

Simon Wilson, the financial secretary, said the Department of Inland Revenue has included 122 delinquent commercial properties and vacant land in the first batch of real estate where it is seeking to exercise its "power of sale" to recover unpaid taxes.

Speaking at the Prime Minister’s Office's weekly media briefing, Mr Wilson said the listings will be updated every two weeks. He explained that the Government is owned more than $700m in delinquent real property tax arrears that it is looking to recover, and is aiming to generate up to $50m annually from selling real estate owned by tax deadbeats.

“Our delinquency is around $700m," Mr Wilson said. "We’re targeting between $25m to $50m a year from the sale of delinquent properties. We have started the process of the power sale for property tax, delinquent property tax. We have 77 undeveloped properties for sale, we have 45 commercial properties for sale. Every two weeks we will be doing that.”

The Department of Inland Revenue is exercising its power of sale under section 25 (a) of the Real Property Tax in a bid to recover the sums outstanding. It is using the lien, or charge, it has over these properties to sell them via a public auction on April 2, 2024. Among the properties listed for sale is a hotel on the south-west corner of Shirley Street and Village Road.

The commercial properties advertised for sale are in New Providence, Abaco, the Berry Islands, Eleuthera, Exuma and Long Island. Vacant land holdings are located in New Providence, Grand Bahama, Abaco, Bimini, Long Island, Eleuthera and Exuma. Given that Bahamian-owned real estate does not attract real property tax in the Family Islands, all those non-New Providence listings are likely owned by foreigners.

The Real Property Tax Act reforms passed to accompany the 2022-2023 Budget sought to "expand the exercise of the power of sale for tax arrears to all property except owner-occupied property beneficially owned by Bahamians".

This made clear that the tax authorities cannot seize, and sell, Bahamian-owned residential property that the owners are living in. This was likely done to ensure Bahamians are secure in their own homes, and also possibly with one eye on votes.

Yet with the real property tax exemption threshold now increased from $250,000 to $300,000, many middle income Bahamians - as well as those earning lower incomes - are paying no tax at all and not affected by the latest move.

Delinquent commercial, residential, foreign-owned land and foreign-owned owner-occupied properties are subject to the 'power of sale'. "Residential" applies to duplex and triplex-type complexes that are rented out by their owner landlords who do not live on property.

Mr Wilson yesterday maintained that the Davis administration is not on a "runaway train in expenditure", and said two large revenue flows - real property tax and Business Licence renewals and fees - will come in between February and April to help reduce the fiscal deficit.

He said of the mid-year Budget: “Recurrent expenditure grew by $8m, capital expenditure grew by $70m, the GFS deficit went down by $90m. So the numbers tell the story there has not been a runaway train in expenditure.

“If you look at the flows in expenditure and revenue, expenses pretty flat-line. We pay salaries every month, basically the same amount every month. Revenue is very, very cyclical.

“Business Licence revenue is due March 31. We get the bulk of our Business Licence revenue between the second half of February and the end of March. We get the bulk of our property tax revenue between the second half of February and the end of April. So those are two big flows which are going to contribute to the reduction of the deficit.”

Mr Wilson said the International Monetary Fund's (IMF) 1.8 percent economic growth forecast for 2024 will be adjusted due to the "positive" tourism numbers that he expects to continue throughout the year.

He added: “The IMF has a growth projection or estimate and, obviously, when you look at the actual figures on the ground, you will see that the number will be adjusted. Tourism has been following very, very well. January numbers have been very, very positive. We expect them to continue on to the first half of the year, and tourism is the main driver of the economy.

“So, when the IMF does their modelling, it's a global model with all kinds of different factors and so forth. But you have to look at what the actual numbers are on the ground, what the performance is and the latest information will tell you that performance has been very strong.”