12 Sept 2009

Something to think about, apathetic ones.

From the Express editorial of September 12, 2009. (Edited)

Property taxation is widely employed in many countries and is more commonly based on a valuation of a property that is collected by a municipal authority and used to provide basic services. This is only one of the many forms of taxation employed such as corporation tax, income tax, value added tax or purchase tax, special surcharges or levies, stamp duty or transfer taxes, death duties and a wide range of others.

We obviously must agree that there must be some major reform of the property taxation system to make it fully equitable for all citizens, but we must question the fairness of taxation simply on the possible rental value of properties. After so many years of ignoring the problem Government now proposes radical reform commencing January 1, 2010.

Citizens may read this in different ways but there is no doubt that it is simply additional personal taxation as we enter an uncertain future of deficit financing. The important feature for citizens owning a single residential property to note is that the taxation will based on the Ministry's estimation of the possible rental of that property, regardless of whether the citizen can afford to rent their property.

Many who are paying rates in the order or $200-$300 per annum will find their properties assessed at rental values of $8,000-$10,000 per month and can expect their tax bill to rise to thousands per year. There will be no difference in services delivered in your area.

Many, especially the self-employed and the professionals, will adjust by simply raising their fees or charges, as will businesses. The salaried middle income group will however have to adjust expenditure and will no doubt through their unions and staff associations press for salary increases.

But the ones who will really suffer will be the retired people living on fixed but declining value incomes, those who have relatives in care, the elderly and chronically ill. This is not about reform or equity. It is simply additional taxation in deficit budgeting brought on by squandermania in a time of plenty. If you fail to pay, Government will simply seize your property. User friendly indeed!