A Temporary Land Tax?

A Temporary Land Tax?

-         Tax at All Costs

A recent newspaper report drew attention to a Cabinet Note, dated September 7, 2017 proposing a new Temporary Land Tax to be imposed during October 2017 – September 2019.

WHY THIS LAND TAX?

So, Government is creating this NEW Land Tax:

A.    To temporarily fill a hole in the Government’s Revenue-Expenditure account.

B.     To fill the gap existing because the Property Tax created in 2009 cannot be implemented until 2020. The valuation of properties for which a May deadline was given, “is expected to last beyond 2018”.

This new flat rate tax is not connected to Rental or Capital Value.

It is nothing more than a desperate measure to increase revenues at the expense of all land owners.

It is a plaster on the sore of the crisis gripping the economy and Government’s disastrous financial position.

FROM LAND & BUILDING TAX TO LAND TAX

Land & Building Tax was 2 taxes in one – Land Tax and Building Tax.

In 2009, the PNM Manning administration repealed and replaced the Land & Building Taxes with the Property Tax.

In 2017, the PNM Rowley administration, unable to implement the Property Tax, is dragging the country back to a Land Tax but with a twist.

To see the effect of this new punitive Land Tax, it is useful to compare the Land Tax that was last paid on land, under Land & Building Taxes in 2009 with the Land Tax to be paid in 2018 and 2019.

The first table shows the rates of Land Tax payable under the Land & Building Tax which is the last tax on property we paid in 2009.

L&B Land Tax Rates

On lands 10 acres or less	$10.00 per acre or part thereof
On lands over 10 acres – 100 acres	$10.00/acre on the first 10 acres $15.00/acre on each acre up to 100 acres $20.00/acre on each additional acre or part thereof

NEW Land Tax Rates

residential land:

Size of Land	2009 Land Tax	2018-19 Land Tax
1 lot – 5,000 sq ft or less	$10	$350
5001-10,000 sq ft	$10	$750
10,001 – 43,560 sq ft	$10	$1,500
1 acre	$10	$2,000
3 acres	$30	$3,000
5 acres	$50	$4,000

agricultural land:

Size of Land	2009 Land Tax	2018-19 Land Tax
1 lot – 5,000 sq ft or less	$10	$300
1 acre	$10	$500
3 acres	$30	$750
5 acres	$50	$1,000
10 acres	$100	$1,500

commercial land:

Size of Land	2009 Land Tax	2018-19 Land Tax
1 lot – 5,000 sq ft or less	$10	$4500
1 acre	$10	$15,000
3 acres	$30	$20,000
5 acres	$50	$30,000
10 acres	$100	$40,000

Taking the example of a single lot of land (5,000 sq. ft), for residential land the increase is $340 or 3400% and for commercial land the increase is $4490 or 44,900%.

Looking at agricultural land, for 1 acre of land, t increase is $290 or 2900% and for 10 acres, the increase is $1,400 or 1,400%.

With the current economic conditions, these increased taxes on land will be sold by Government as being “not burdensome”, “reasonable”, etc.

What has to be kept in mind is that this Tax does not include the value of either the land or houses or other buildings that may be on the land which will be used to set the tax when the Property Tax is imposed in 2020.

This temporary Land Tax is being imposed because the illegal Property Tax cannot immediately and amendments to the Property Tax Act 2009 and the already amended Valuation of Land Act will have to be passed.

While Government will waive the Property Tax for 2 years, their waiver is another fake as they will impose the Temporary Land Tax anyway.

The Property Tax, which they have been trying to implement since 2015, and which they could not, will be imposed with its full weight as an unreasonable and unfair tax on all properties in 2020.