NLA to revalue some 900,000 land parcels; property taxes expected to rise

The National Land Agency (NLA) plans to revalue roughly 900,000 land parcels islandwide, an exercise that will update government records to reflect the current economic value of property across Jamaica for the first time in nearly a decade.

The NLA started the exercise on July 1 and expects to complete it within 20 months. It will update the unimproved value of each parcel — the estimated market price of the land alone, excluding buildings and crops. The Land Valuation Act requires updates every five years, but the NLA indicated that some valuations have remained unchanged since the 2017-18 fiscal year.

The outcome is likely to mean higher property tax bills within the next two years, given that land values across much of the island have risen substantially since the last cycle.

Taxing land on figures that are nearly a decade old is indefensible, according to Caribbean Policy Research Institute (CAPRI) Executive Director Dr Damien King.

“If the country is going to have property taxes at all, which pretty much every country has, then it should always be based on up-to-date valuations,” economist Dr King told the Financial Gleaner. “If you’re going to tax my income, you’re not going to tax my income on what it was in 2008 … so revaluing land so that it represents current values is something that should take place every year.”

He rejected the suggestion that higher property taxes would fuel inflation. The tax, he said, is simply a transfer of purchasing power. “The purchasing power that the landowner would have had is now in the hands of the government, so the government will spend it rather than the homeowner.”

The value assigned to a parcel depends on its size, zoning and permitted use, development potential, topography, soil classification, access to municipal and commercial services, and neighbourhood characteristics.

Property tax rates vary by parish from 0.5 per cent to 1.5 per cent of unimproved value per year. A parcel valued at $10 million, for instance, would attract annual property tax of between $50,000 and $150,000.

Property taxes remain a marginal part of Jamaica’s revenue base. A 2018 CAPRI report found they accounted for just 2.0 per cent of total tax revenues and 0.3 per cent of GDP, compared with an average of 2.1 per cent of GDP across Organisation for Economic Co-operation and Development countries. Income tax contributed 42 per cent of revenues and GCT, 39 per cent.

luke.douglas@gleanerjm.com