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Property valuator at seminar: Tax regime needs reform
Property valuator Mark Farrell says that the property tax, as it currently exists, requires careful examination and reform before it can be implemented.
Farrell made the comments at a breakfast seminar titled Property Tax: What You Need to Know, held at the Hilton Hotel in Port-Of-Spain, on Thursday.
The seminar, which brought together stakeholders in the real estate, finance, tax and insurance sectors to discuss various aspects of the Property Tax Act, was hosted by the Institute of Banking and Finance in collaboration with the Bankers Association of T&T and accounting firm KPMG.
Farrell noted that while the current state of the economy meant that the Government had to explore additional revenue streams, the property tax regime in its current dispensation was ill-suited for the realities of T&T.
“In my opinion, the property tax is necessary, however, the system does not suit our country because of the nature of our property market and registration system. Additionally, Trinidadians are highly secretive people when it comes to discussing property and rent-related matters,” Farrell said.
The valuation veteran added that he was not in agreement with the methodology used to compute the tax on residential properties, which involved levying the tax based on the rental value of the property.
“One of the main criteria for a successful property tax system is ‘transparency’. The challenge with using the rental value approach is that this information would have to be gathered verbally since most residential rental leases are not registered. The question therefore is whose verbal information will be accepted?” Farrell said.
Farrell suggested that a better, more transparent approach for administering the property tax would be to use the capital value of residential properties since this information could be more objectively assessed and could be perceived as “fair” by the homeowner.
He said: “Traditional wisdom suggests when assessing residential properties using the capital value approach is more effective since homeowners already understand this and information on deeds is readily available since these must be registered. The government already knows what they are trying to achieve with the tax so all that would have to be done is as an adjustment on the percentage to be charged as tax.”
Also speaking at the event was KPMG tax director Gillian Wolffe-O’Neil who went through the intricacies of the Property Tax Act and discussed the role of the Commissioner of Valuation and Board Of Inland Revenue in operationalising the tax.