Friday, 28 February 2014

D'yer mak'er

Emailed in by Michael Hawes (who had a good reader's letter in The Independent this week), from The Jamaica Gleaner:


In the meantime, the Government appears set to continue with the system of charging property tax on the unimproved value* of properties.

Eric Allen, commissioner of land valuation, said moving to a system of charging property taxes on the improved value would use up a lot of time and resources. He said property tax was currently charged based on location.

Phillips said while applying property taxes based on the improved value would be more effective in getting the wealthier to pay more, it would require the authorities to examine "every single parcel, and you have to arrive at a valuation of building and other accoutrement and other improvements that have been made".

The minister said the reasoning behind applying taxation on the unimproved value of properties is that it would provide an incentive for persons to do improvements to their properties. He further said that policymakers of the day felt that applying the tax on the improved value could send the signal to persons that they are being penalised for making improvements to their properties.

* 'Unimproved value' is a bit of a misnomer actually, what they mean is the 'site premium' or 'location value', i.e. the extra rental value of a building on favourable Site X compared to the rental value of a similar building on marginal Site Y, where the rental income is just sufficient to cover the bricks and mortar cost but generates no surplus above and beyond that.


Derek said...
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Derek said...

Nice to see. However I always think of Jamaica as an awful warning rather than a shining beacon. It just goes to show that if LVT is set at too low a rate and not used to replace other taxes, you might as well not bother. It may not be doing any harm but it's not doing much good either.

Mark Wadsworth said...

D, nope, anything is better than nothing.Toehold, foot in the door and all that.

Plus I was running a series of posts about LVT which all were named after songs from 'Houses of The Holy' and this one hit the spot :-)

Kj said...

Derek: there is something called ceterus paribus. Jamaica is better off with LVT, but; when we talk about good government and private enterprise creating higher land values, well, you have to have good government and private enterprise.