Christie: Stamp tax is scaring away investors
The property market is suffering under the 12 percent stamp tax, a leading realtor claims, as the increase is now making it very difficult for foreigners to realistically see a return on an investment.
John Christie, the vice president of HG Christie Ltd, told Guardian Business that the current stamp tax is driving away demand and is beneficial to neither property companies or the government.
“The stamp tax is hurting sales and as far as I understand the income for the government is down,” he said. “Having a stamp tax of 12 percent
makes it hard to buy and invest. That’s 24 percent tax between buying and selling the property. In order to make a profit, you have to have the property appreciate considerably just to break even.”
Christie appealed to the government to drop the current Stamp Tax to 8 percent so the country can stay competitive and stimulate buyers.
He pointed out that the 12 percent tax drives the price of real estate down, so buyers end up offering what they think the property is worth while taking it into account. In other words, just because the tax has gone up, doesn’t mean international buyers are willing to pay that premium on top of current prices.
“It pulls down what the owner is going to get, it eats into commissions, and it makes buyers think once, twice and three times about whether they want to invest,” Christie said.
Although the 12 percent stamp tax has been in effect for many months, he said the true impact is now being felt.
Zhivargo Liang, the state minister of finance, told Guardian Business that looking at the Stamp Tax as a reason for poor sales is “far too narrow”.
He said the global economic challenged being faced in The Bahamas and beyond made the situation very complex. Liang challenged whether there was any clear evidence pointing to the legitimate impact 2 percent tax increase on sales.
“We are in an economic environment that is killing off lots of economic activity,” he added.
“I think it’s a bit too narrow to suggest simply that this tax increase is the reason people are not buying property.”
Liang felt that it was easy to cast blame on the public sector. The government has to raise revenues to maintain public services and the goods it provides, he said. Meanwhile, the private sector often increases prices and commissions, which essentially creates the same problem.
“I could come up with anecdotal evidence of my own that sales have picked up despite the 2 percent rise,” Laing said.