OPM Communications director refutes Pintard’s assertions, says PM was accurate
NASSAU, BAHAMAS — The Opposition is challenging the Prime Minister’s assertion during his budget statement that VAT on realty transactions over $1 million underperformed, citing discrepancies between the figures he presented in Parliament and those in the budget documents.
Accusing Prime Minister Davis of committing another gaffe, Opposition leader Michael Pintard stated that the figures presented by the Prime Minister during his budget statement last week differed from those outlined in the budget documents tabled in Parliament.
Davis noted that by the end of March 2024, only $15.1 million, or 7.9 percent of the budgeted total, had been collected. However, Pintard pointed out that this figure contradicted the $81.4 million stated in the budget book for the same period.
Latrae Rahaming, Communications Director in the Office of the Prime Minister in a statement last night explained: “The Prime Minister accurately reported that $15.1 million was collected under “VAT on Realty Transactions Over $1.0M”. There is another category of revenue called Foreign Property Transfers. Under this item, an additional $66.3 million was collected. It is important to note that there was no budget allocated specifically for “Foreign Property Transfer.” These two revenue items combine a total $81.4 million. Which clearly explains the reported figures, contrary to the claims made by the FNM.”
Prime Minister Davis, the Minister of Finance is expected to kick off the budget debate this morning.
In his statement, Pintard argued: “This is not a small typo or editing error; it’s a $66 million budgetary mistake. Which one did the Prime Minister get wrong: the revenue numbers in the budget statement or the revenue numbers in the budget book? Inquiring minds want to know.”
He continued, “We recall that early in 2023, the Prime Minister was forced to apologize to the Nassau Guardian when he did not understand that the newspaper had accurately reported what he said about his government’s increased fiscal deficit for the related period. Confusion has become the norm under Davis’ distracted leadership.
“We have long called for the Prime Minister to slow down on his globetrotting and spend some time focusing on work here at home. He is paid to execute his job as the Minister of Finance, but his priorities are elsewhere. If he has no intentions of cutting back on his beloved travel agenda, he should consider appointing a full-time Minister of Finance who will not embarrass the government and the country with repeated gaffes on critical fiscal matters.”
Prime Minister Davis last week noted that the government has taken steps to address the revenue underperformance of VAT on real estate transactions over $1 million.
He stated: “The area of revenue underperformance which became apparent during these nine months is the VAT on real estate transactions. For example, if we look at the budget forecast for VAT on realty transactions over $1 million, it is $190.3 million. As of the end of March 2024, we have only collected $15.1 million, or 7.9 percent of this total. It has also been observed that the certificate of residency and international holding permit issuances are consistent with Balance of Payments data that shows a strong inflow of funds for property purchases. Last year’s revenue intake for this item was $121.1 million. These are the reasons why this Government must take a deeper dive into the underperformance of this category of revenue.”
Davis noted that information provided by the local real estate sector about the buoyancy of the high-end real estate market is not reflected in the government’s receipts.
“We have witnessed a sizable drop in revenue this year for this category. This is the primary underperforming revenue item that we have identified, and we have included several administrative measures to address the underreporting of real estate transactions. One such measure is the requirement that the Real Property Tax Assessment Number provided by the Department of Inland Revenue must be affixed on the Certificate of Registration and all certificates before forwarding to the Department of Immigration,” said Davis.
He further noted that the Department of Immigration must ensure that the Real Property Tax Assessment Number is captured on its approval documents for economic permanent residence and homeowners.
“This administrative step will help streamline the process and ensure that the real property tax number is carried throughout all processes across all government agencies, which would allow for auditing to ensure that the correct tax amount is being paid. Another area of concern is that the government is aware of several unstamped documents held by persons, which results in these persons not being able to prove land ownership to the Department of Inland Revenue and otherwise. This impedes development and commerce in this country,” Davis said.
The Government has decided to grant amnesty to allow documents to be stamped at the value of the time the transaction took place rather than at the current market value. This regime is temporary and effective immediately, with an expiration date of December 1, 2024.
“This is a significant concession. At present, all documents are stamped at their current market value, regardless of when they were purchased. For example, suppose an individual purchased a property thirty years ago for $25,000 and sold that same property for $50,000 but never stamped the documentation. Later on, a new prospective buyer wants to acquire the property through a mortgage. The property now has a small house on it that is worth $150,000. To have the property financed, all of the transactions for the last 30 years need to be recorded, that is, to have the VAT paid at the current market value of $150,000 plus penalty. Unfortunately, this is all too often a deal breaker, preventing the transaction from moving forward, hurting both the buyer and the seller, and acting as a drag on the real estate market,” said Davis.
Another measure to address the issue of revenue underperformance for VAT on real estate will be the elimination of inter-vivo transfers to non-natural persons. All inter-vivo transfers after July 1st would have to be to a natural person.
