First published in The Tribune and posted here with the kind permission of the author.
It’s time to push the Pause Button to allow for a serious study of the implications of VAT, especially as they relate to the cost of real estate.
For some years, successive governments have offered a First Time Buyers stamp duty exemption on homes below a certain price ceiling.
The idea was to give first time buyers a better shot at home ownership and to stimulate the rest of the economy via the ripple effect.
Adding VAT on real estate transactions will defeat the very purpose of this.
The price of homes in the Bahamas, particularly in New Providence where there’s a supply and demand issue, is high.
It would simply be counter-productive to turn around and slap 15% VAT on real estate commissions, legal fees, survey fees, appraisal fees, inspection fees, etc.
The tax is payable by the consumer.
In many instances, the added cost will push a buyer off the path of bank mortgage qualification.
Just think what it would mean to people who have to pay stamp tax as well?
LAND BUYERS
Now, let’s look at people who buy vacant land to build on.
The architect, the contractor, the lawyer, the surveyor, the landscaper and so on will each have to add 15% VAT charges to their fees or contract prices.
This whole business of VAT could have a crippling effect on the economy. In the U.S. the real estate industry (including construction, etc.) is said to comprise about 20% of their GDP. I assume it is probably similar here. We need to ENCOURAGE this industry, not DISCOURAGE it.
COLLECT EXISTING PROPERTY TAXES!
During the discourse over VAT, it’s been confirmed that the government is owed a whopping half a billion dollars in real property taxes!
We hear a lot of whispers concerning the non-collection of Customs revenues, NIB and other charges.
It seems that the law abiding citizens who are already struggling to pay their taxes will bear the brunt of VAT while the non-compliant will continue to break the law.
Why go after the innocent instead of holding the guilty accountable?
Once the government collects all outstanding taxes, it will be in a better position to implement additional and better thought out revenue raising measures.
INVESTMENT BOARD DELAYS
I was pleased to read that the Bahamas Bar Association will survey member lawyers on their experiences in dealing with the Foreign Investment Board.
The idea is to develop a more consistent process to allow for applications to be approved within 30-45 days.
I can tell you from first-hand experience, delays in the approval process have killed sales that would have had a meaningful impact on our cash strapped economy.
Foreign and Bahamian investors will walk away from a sale if they can’t get the necessary approvals within a reasonable timeframe.
This hurts a lot of Bahamians – the seller, the real estate agent who’s worked hard to bring about the sale, the lawyer, the contractor and his employees, the insurance company, the painter, the landscaper, the surveyor, the retailer and so on.
Questions? Comments? Email Mr. Lightbourn by clicking here…
“For some years, successive governments have offered a First Time Buyers stamp duty exemption on homes below a certain price ceiling.”
And many first time buyers were cheated out of this exemption by successive governments. I never got my exemption – mishandled during the 2007-12 Ingraham administration.
This is typical opposition talk, that I have little confidence in translating into real change should this opposition become the government again.
How is that possible Mr. Aranha?
They rescinded the policy mid stream?
Were there delays in applying?
When exceptions continually have to be made to these policies, don’t we realise something is wrong with the policy in the first place?
Mr.Lightbourn is right on the money & the powers that be need to listen & learn.It appears to me that between the government spending & the VAT plus they want to implement a national health plan that they absolutely want the country to fail,simple as that.I think that should be our new slogan “The VATs not where its at” !
Some simple advise for low information individuals.. First, use a well regarded real estate broker that understands the law as it applies to you.. Secondly, use a reputable lawyer, if you can find one, to represent you in your transaction and to make sure your rights are fully protected.. That way you will not be taken to the river and back.. A little prudence goes a long way in protecting your self-interest..
I’d love to use the services of a reputable Lawyer,
Kinda hard to find one though.
Most Realtor’s aren’t far behind quite frankly.
What we have is systemic dysfunction, coupled with tribal behavior from the top and through the rank and file, both public and private sector.
How can we demand, encourage or even teach Bahamians to be law abiding when everyday examples at the top display success resulting from behavior totally opposite?
As for VAT, The FNM was the administration most ardently pursuing it, the PLP just got tagged holding the bag on it this go around.
Initial target implementation date? 2008.
The impending fiasco lies at the feet of our entire political oligarchy,
and the people will again, as always,
foot the bill.
You are so correct that “The impending fiasco lies at the feet of our entire political oligarchy,and the people will again, as always, foot the bill.”
It is amusing thought to see how political allegiance is playing into this discussion.
Or is that my imagination?
I think that its the lawyers for the most part in parliament Oracle no one else.They are the ones that seem to ignore the problems & I would say create a lot of them too. This government we have right now is by far the worst this country has ever had period & few would deny that & none of them really want to do whats best for the country it seems to me. Seems like you think anyone in business must be crooked which is a typical government mentality & I disagree with you totally on that. If the PLP “got tagged” holing the bag then if they are so much better why don’t they “drop the bag” on this one like they do on everything else, stick their heads in the sand & hide ?
No Overtaxed, I do not think all those in business are crooked, in fact I despise the broad brush strokes often used from the political platform against any person, nationality or group who would dare think for themselves, or God forbid, be above board.
Seems that is inconceivable to most.
That there are upstanding and moral people of all ilk and position as well as the crooked cannot be denied however.
It has been said we did not end piracy, we simply donned suits and briefcases, and truth be known, many of our most wealthy and influential families dabbled in all manner of questionable enterprise over the decades.
It is not for me to judge them, but as a society we do not name and shame,
which is an essential part of any societies safeguards against corruption and degradation.
If anything goes, well, seems everything is going……
Right now I do paint with a broad brush for parliament & the government because they are creating most of our problems.We do not need 40-50 people in the house,we just do not need them.Every problem we are facing today financially is because of the stupid things that the government has done to make it so & that is undeniable.They need to take that big plank out of their own eye first before doing anything else.Stop taxing business to death for their own foolishness.Fair taxes I can live with but not this overkill.If 10% is enough for God then by Jove it should be enough for the government,any thing more is stealing from me.
Broad Brush strokes are insufficient in their case, they have need of Tarring and feathering!
Ain’t that the truth,that might help because nothing else does.