Real property tax arrears at $600M, reveals auditor general’s report

As of 2018, real property tax (RPT) arrears amounted to $600.48 million, according to the most recent auditor general’s report, which was tabled in the House of Assembly yesterday.

The total represented an increase of $78.21 million during the 2017/2018 fiscal year over the previous period. During this time, the Department of Inland Revenue (DIR) collected $123,516,235 in real property taxes.

Of the total arrears owed, 31 percent amounted to the surcharge charged on the cumulative arrears, the report notes.

“The prior year arrears and surcharge for both fiscal periods (2016/2017 and 2017/2018), when combined, accounted for 92 percent and 90 percent of the cumulative taxes, respectively. By law, if taxes are not paid by December 31 of each year, a five percent surcharge is applied. This surcharge increases the taxpayer arrears substantially,” Auditor General Terrence Bastian said in the report.

“Efforts to increase real property tax revenue collection, in all aspects, is deemed vital as in comparison to the tax arrears; a minimal amount of revenue is collected annually.”

The International Monetary Fund (IMF) suggested in its recent Article IV Mission report that real estate taxation could be strengthened by increasing the rate on higher value residences.

In 2019, the government embarked on a real property tax modernization process, where it contracted Tyler Technologies to carry out data collection services on every property to update the real property tax register. The government estimated it would collect an additional $21 million in revenue from this exercise.

The performance audit of DIR’s Real Property Tax Department, which was also tabled in the House yesterday, revealed that 40 percent of bills do not make it to property owners.

Bastian said the government must relaunch a public awareness campaign to encourage property owners to pay on time.

“As tax bills are mailed in November, focus on overcoming the nearly 40 percent bad address problem, communicate that taxes are due even if a bill is not received, how to do online lookups, provide a March payment discount and ease the benefiting from senior citizen discounts,” the auditor general said.

“Test what demographic groups are hearing the communications, how well people understand the communications and thus how to adjust communications. And include progressive communications about the revaluation process, including the rights of DIR employees to enter properties and rights of property owners to keep photos of their properties from being posted online – after a policy decision is made on this point.”

The auditor general also recommended a real property tax policy review focusing on how property revaluation will unfold in the eyes of citizens.

“Considerations include whether other contemplated tax changes should be done in parallel to buffer the valuation changes, have a phased-in period, and more fully and quickly respond to policy questions that arise during implementation,” he said.

“The tax policy would ideally be discussed in the context of classic policy criteria and administrative ability and capacity to handle the volume of the public contracts that result from tax policy choices, starting with the time-sensitive question of appeals of the revaluation.”

The auditor general also recommended improvements in tax policy, business process and automating decisions with management be advanced through proper property registration, property valuation, providing accessibility to look up taxes due online, online payments and appeals.

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source https://thenassauguardian.com/real-property-tax-arrears-at-600m-reveals-auditor-generals-report/