DPM: Law change had unintended impact
Deputy Prime Minister and Minister of Finance Peter Turnquest said yesterday the government never intended to increase the real property tax (RPT) rate on second homeowners in The Bahamas when it changed the definition of owner-occupied properties in the act.
In a statement, Turnquest said, “The government of The Bahamas made no undertaking to reduce any tax rate for any individual or any group with the announced decision to revert to the previous definition of owner-occupied properties.
“For real property tax, the government undertook to increase the top end rate for undeveloped land owned by foreigners. This is what was announced in the budget communication. This is what will remain.
“What the government is undertaking to change is the amendment that quantified the time frame for owner-occupied property.
“This is being done simply because that amendment had the unintended impact of bringing legitimate and non-commercial home ownership under the commercial property tax rate.
“And that was not the policy intent.
“In none of the budget speeches or other communication is there any reference to increasing real property tax on second homeowners, nor on any other developed property. And no such tax increase was intended nor reflected in the budget estimates approved by Parliament.
“As such, the correction in the language in respect to the amendment passed with the budget bills will have no effect on the projected tax income for the country.”
On Tuesday, the government announced that it had reversed its decision to change the definition of owner-occupied, which would have increased taxes on properties not occupied for at least six months.
The decision was made after Lyford Cay Property Owners Association (LCPOA) Chairman Henry Cabot Lodge III wrote to Turnquest on July 30, 2018, warning that the changes would cause some Lyford Cay residents to leave The Bahamas.
Lodge noted that second homeowners who do not reside in The Bahamas for six full months annually will see their real property tax doubled and will no longer be eligible for the $50,000 annual cap on their real property tax.
“As a result of this change, beginning January 1, 2019, an owner that resides in their property for less than six months in any given year will be required to pay real property taxes annually at the rate of 0.75 percent on that part of the market value which does not exceed $500,000 and two percent on that part of the market value which exceeds $500,000,” Lodge wrote.
He said the amendments would have a “devastating” impact on the Lyford Cay community.
But Island Luck CEO Sebas Bastian said he is not a supporter of being treated like a second class citizen in his own country.
“You do for Peter, you could do it for Paul,” Bastian said.
“I live by principles and these kinds of things are very disturbing to see.
“On the one hand, with just a complaint, something can be immediately considered (for the Lyford Cay residents) but then on the other hand when it comes to Bahamians, it’s written in stone. I find that troubling.
“I find that concerning. It’s the people’s time. I consider myself people too.”
Yesterday, Englerston MP Glenys Hanna-Martin questioned why the government would stick to a decision on a budget cut for uniform assistance for the poor, but move swiftly to respond to concerns raised by the Lyford Cay residents.
“They sent a message very loud and clear as to whose voices they could hear,” she said.
“Some voices, they can’t hear and they dismiss them out of hand while they insult them.”
Despite widespread public backlash, the government was unwavering after it announced a plan to increase value-added tax from 7.5 percent to 12 percent and introduce a sliding scale tax for gaming houses starting July 1.