Central and South Abaco MP and Parliamentary Secretary in the Prime Minister’s Office, James Albury told concerned stakeholders that “every measure is being taken” to resolve the “ludicrous” property tax bills creating worries for Abaco and other Family Island economies.
Mr. Albury noted that the government has conceded that the 2018 property valuations – and associated tax bills issued to foreign second home and real estate owners – were “inaccurate and unfair”.
It was said that the Department of Inland Revenue had made a serious error, which had resulted in some cases where foreign investors received tax bills higher than the value of their property, and Nassau was blamed 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.
Mr. Albury promised to “do my utmost” to ensure the Ministry of Finance issued a public 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 a meeting with stakeholders in Abaco 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”.
Mr. Albury said that the meeting 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 Frederik Gottlieb and Dupuch & Turnquest’s Heather Hunt.
Mr. Albury added that “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.”
This blunder has created a potential predicament for foreign direct investment (FDI) and real estate in the Family Islands, and again illustrates the difficulties 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.”