Abstract
Since 1956, government officials have tried to improve property tax policies and practices in Jamaica: reformers devoted eighteen years to switching from a system of taxation based on the capital value of real property to one based on the unimproved value of land, and they have spent the subsequent eighteen years trying to maintain and upgrade this new system of property taxation. Results have been mixed. Considerable progress has been made in compiling and automating a universal land valuation roll, despite limited resources and lack of a national legal cadastre upon which to build a fiscal cadastre. This valuation roll is indeed quickly dated, but the automatic, periodic application of an inflation index would keep property values relatively current.
What is’t to us if taxes rise or fall? Thanks to our fortune, we pay none at all.
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Notes
The Land Valuation Act, Paragraphs 2 and 6(1).
The Land Taxation (Relief) Act, Paragraph 5(1).
The Land Taxation (Relief) Act, Third Schedule (Agricultural Land and Hotel Land) Derating Order, 1973.
The Land Taxation (Relief) Act, Paragraph 5(4) and First Schedule.
Elizabeth Stair, A Position Paper on The Property Taxation System (Kingston: Land Valuation Department, August 1990), 4.
The price at which the land would be exchanged given a willing and bona fide seller and buyer.
According to Paragraph 2 of The Land Valuation Act, improvements are “those physical additions and alterations thereto and all works for the benefit of the land made or done by the owner or any of his predecessors in title which … has the effect of increasing its value: Provided that — (a) the destruction or removal of timber or vegetable growth; (b) the draining, filling, excavation or reclamation of the land; (c) the making of retaining walls or other similar works designed to arrest or prevent erosion or flooding of the land; or (d) the grading or levelling of the land, shall not be regarded as improvements.… ”
According to Paragraph 7 of The Land Valuation Act, any increase in the capital value of land attributable to the presence of bauxite or latente, “shall, for the purpose of determining the unimproved or the improved value of the land, be deemed to be limited to the value of any royalties payable to the owner of the land” and “the value of royalties payable to an owner of land in respect of bauxite or latente shall … be deemed to be one-twentieth of the unimproved value of the land.”
According to Paragraph 11(4) of The Land Valuation Act, a variation of this is “where two or more parcels of unoccupied land adjoining each other are valued as one portion of land and one or more parcels of such land is or are sold or occupied …”
The Land Valuation Act, Paragraph 4.
The Property Tax Act, Paragraphs 3(2) and 3(3).
The Property Tax Act, Paragraphs 3(1) and 4.
According to Paragraph 5 of The Property Tax Act, “where the property tax due and payable in respect of any year does not exceed five dollars it shall be paid in full and no moieties or instalments [sic] shall be allowed in respect of such tax.”
Formally, according to Paragraph 4 of The Property Tax Act, the property tax “shall be carried to the credit of the Consolidated Fund.”
The following points are based on discussions with Norma Dixon (Commissioner of Inland Revenue), as well as with staff at the Constant Spring Revenue Services Center in Kingston: 1) The taxpayer should first be reminded of the unpaid tax liability, either in person, by phone, or in writing. 2) If the tax remains unpaid, revenue field officers can then be issued levy writs, which empower them to serve demand notices (including a mandatory 10 percent penalty and an optional interest charge) for collection of tax liabilities or attachment of the property owner’s personal property. 3) Legally, almost any asset on the taxpayer’s premises may be levied to clear outstanding tax liabilities. 4) The government may also lodge a caveat, which would prevent a title transfer until the property tax is paid. 5) Unresolved disputes are taken to the Resident Magistrates Court. If the Court rules in the government’s favor, individuals generally have 30 days to pay or face incarceration, while companies are served a warrant of distress. 6) According to The Property Tax Act, “until paid the said tax shall be a first charge and lien upon the real property liable thereto.”
The following discussion is based on interviews with Elizabeth Stair (Commissioner of Land Valuations), Norma Dixon (Commissioner of Inland Revenue), and Dennis Larman (Managing Director of Fiscal Services (EDP) Ltd.).
The site value system was introduced in Jamaica when The Land Valuation Act (Law 73 of 1956) took effect on January 18, 1957. A description of the pre-1956 evolution of the Jamaican property tax can be found in: O. St. Clare Risden, “A History of Jamaica’s Experience with Land Taxation based on the Site Value System,” paper prepared for the Conference of the Committee on Taxation, Resources and Economic Development held at the Lincoln Institute of Land Policy, Cambridge, Massachusetts, October 1976, 2-3.
This inequitable distribution of land is even more dramatic than the above-cited figures might indicate, as roughly 53,000 of the 145,000 farms under five acres are actually less than one acre.
Risden, “A History of Jamaica’s Experience with Land Taxation based on the Site Value System,” 4. The figures in the preceding paragraph are taken from the same source.
Norman Manley was the father of Jamaica’s present prime minister, Michael Manley.
The most important of these reports were the Bloomberg (Royal) Commission of 1943, the (J.R. and Ursula) Hicks Report of 1954, and the (J.F.N.) Murray Report of 1956.
The Land Valuation Act was also written with Australian technical assistance.
A detailed account of how Jamaica’s fiscal cadastre was created can be found in: Risden, “A History of Jamaica’s Experience with Land Taxation based on the Site Value System,” 7-8.
Risden, “A History of Jamaica’s Experience with Land Taxation based on the Site Value System,” 9.
Risden, “A History of Jamaica’s Experience with Land Taxation based on the Site Value System,” 11.
These arguments for converting local rates to a national property tax were made repeatedly in recent discussions with former Minister of Finance David Coore and current Chairman of the Revenue Board Canute Miller.
It is generally believed that Minister Coore was referring to money raised from the excise duty on beer. The figure quoted is in Jamaican dollars. In 1990, the average exchange rate was J$7.18 for US$1.00; see Exchange Rates following the Table of Contents for a full listing of exchange rates since 1970.
A temporary system of differential tax rates was introduced during this reform to accommodate the three property tax systems being implemented in Jamaica in 1972: in four parishes (Kingston, St. Andrew, St. James, and Hanover) the tax roll was based on 1937 self-declarations of capital value; in seven parishes (Portland, St. Thomas, St. Mary, St. Ann, Trelawny, St. Elizabeth, and St. Catherine) the improved values were as much as fifteen years out of date; and three parishes (Manchester, Clarendon, and Westmoreland) had been surveyed for current unimproved values, but were still implementing the old property tax system with old capital values.
Risden, “A History of Jamaica’s Experience with Land Taxation based on the Site Value System,” 14.
Risden, “A History of Jamaica’s Experience with Land Taxation based on the Site Value System,” 15.
Derived from figures presented in Risden, “A History of Jamaica’s Experience with Land Taxation based on the Site Value System,” 18.
O. St. Clare Risden, “A Re-Examination of the Site Value as the Base for Property Taxation in Jamaica,” paper prepared for the Conference of the International Union for Land-Value Taxation and Free Trade, Vancouver, May 1986, 6-8; and Stair, A Position Paper on The Property Taxation System, 7.
Gross domestic product deflators are taken from: International Monetary Fund, Bureau of Statistics, International Financial Statistics (Washington, D.C.: International Monetary Fund), monthly issues and yearbooks.
Risden, “A Re-Examination of the Site Value,” 6–8; Stair, A Position Paper on The Property Taxation System, 7; and International Monetary Fund, International Financial Statistics, “1990 Yearbook” (vol. 43), 438-441 and “September 1991” (vol. 44), 308-11 (Washington, D.C.: IMF, 1990 and 1991).
Risden, “A History of Jamaica’s Experience with Land Taxation based on the Site Value System,” 24.
Land Valuation Department, “Valuation Bands Statistics,” Kingston, unpublished; and author’s calculations. The difference between the normalized stacked bar charts for “valuation” and “assessment” in Figure II-3 is due to progressive property tax rates.
Land Valuation Department, “Valuation Bands Statistics,” Kingston, unpublished and author’s calculations.
According to Commissioner of Land Valuations Elizabeth Stair, the use of private valuers during the 1983 revaluation greatly reduced the objections rate when compared with the 1974 revaluation, from approximately 8 percent to 1 percent of all parcels valued.
Stair, A Position Paper on The Property Tax System, 4a; Land Valuation Department, unpublished statistics; and author’s calculations. The percentage increases in tax liabilities are greater than the percentage increases in unimproved values because of progressive property tax rates.
O. St. Clare Risden, An Analysis of Alternative Strategies for the Period 1977 to the Decade of the 1980s (Kingston: Land Valuation Office, April 1977), Schedule B.
Holland and Follain, The Property Tax in Jamaica, 22.
Risden, An Analysis of Alternative Strategies, Schedule B; Holland and Follain, The Property Tax in Jamaica, 26.
Stair, A Position Paper on The Property Tax System, 7.
This figure is calculated as follows: the total value of the tax roll before relief, derating, and exemptions is estimated to be J$ 102.2 million; the revenue loss resulting from agricultural and hotel derating, discretionary and statutory reliefs, and non-taxable properties is estimated to be 42 percent of property tax liability, or J$30.2 million, reducing total net tax collectable to J$72.0; the collection rate is estimated at about 60 percent, or J$43.2; and property tax receipts in 1989/90 (the most recent figure) total J$67.3, which leaves 36 percent of collections (the J$24.1 difference) attributable to arrears payments.
Risden, “A History of Jamaica’s Experience with Land Taxation based on the Site Value System,” 1. 46Stair, A Position Paper on The Property Tax System, 8. 47Holland and Follain, The Property Tax in Jamaica, 24-25.
The following examples were given during interviews with officials of the Revenue Board, the Department of Inland Revenue, and the Constant Spring Revenue Services Center in Kingston: 1) Although a levy warrant or demand notice can be delivered to anyone connected with the property in question, the higher the stakes, the more inaccessible and combative the taxpayer. 2) If goods are distrained, transport and storage are a logistical headache. 3) Issuing a summons to attend court necessitates not only locating the person named in the summons, but also serving the summons no earlier than three days prior to the scheduled court session, between 6:00 a.m. and 6:00 p.m., for a J$0.25 incentive payment. 4) The process for lodging a caveat is a bureaucratic nightmare, and it has not been practical to dispose of real property according to procedures outlined in the Quit Rents Act. 5) The entire enforcement process is pursued largely at the discretion of field supervisors, which can be confusing and demoralizing for revenue field officers.
Holland and Follain, The Property Tax in Jamaica, 105.
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Churchill, C. (1998). Jamaica Case Study. In: Property Tax Reform in Developing Countries. Springer, Boston, MA. https://doi.org/10.1007/978-1-4615-5667-1_2
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