The Property Tax

With the current worldwide depression in the price of oil and gas, the TT Chamber is fully aware of the need for Government to find alternative sources of revenue to help close the gap of lost income. Since 2011, following the suspension of the Property Tax Act of 2009, the Government has failed to collect taxes from property owners, resulting in millions of dollars in lost revenue.

The Minister proposes to re-introduce the Act, which will work in tandem with the Valuation of Land Act, Chapter 58:03, to which minor amendments will be made. In the legislation, the term ‘land’ refers not only to all buildings, structures machinery and plant erected or placed upon, in, over, under or affixed to land - but also land covered by water.

It appears then, that the very definition of ‘land’ needs to be further clarified because of the implications for certain sectors. For example, does land covered by water include offshore operations of oil and natural gas companies? Diversifying our economy is a must and so another area of critical concern is with respect to industrial land. This will be subject to a six percent tax of the installed cost of plant, machinery and associated buildings. Ambiguities remain about precisely how the taxable value is created for use by the Valuations Division of the BIR, thus making it impossible to estimate the cost to industrial land owners.

The TT Chamber is concerned that the Act may not bolster the non-energy industries with the wherewithal to strengthen our economy. It introduces, in effect, a disincentive to invest, while potentially rendering Trinidad and Tobago companies less competitive. If Government plans to promote manufacturing by increasing nonenergy exports, this current tax on land and more so, machinery seems counterintuitive. Indeed, one might argue that the current taxation rate on industrial land should be less than what is currently being proposed, to encourage further expansion and investment in the sector. The Board of Inland Revenue is charged with assessing all land in the country by 31st March 2017, and every year thereafter.

The owner or occupier of the property must assist by providing the BIR with relevant documentation and other details. The TT Chamber wonders if this is a realistic expectation, given the relatively short time-frame. Expected implementation is in fiscal 2017 and we are fast approaching the close of this current year. What we do know is that business has had to grapple with increases in the Green Fund Levy, Business Levy and most recently, amendments to National Insurance contributions. Capital investment may well be restricted in light of these and the proposed new tax regime. While the TT Chamber is in favour of the re-implementation of the tax, we recognise that there are serious issues such as those raised here and others, which need to first be settled before moving forward.