Home Secretary Walter Roban presented property assessment and tax [Special Provisions and Postponement of Preparation of Draft Valuation List] Law 2020 in the House of Assembly.
“This bill seeks to modify the effect of the Land Valuation and Tax Act 1967 in order to extend the period of validity of the current valuation list and to postpone the preparation of the next draft valuation list for Bermuda.” , said the minister.
âAn island-wide reassessment based on July 2019 pre-COVID rental levels would be extremely painful for businesses and local landlords following the current and continued economic hardships Bermuda has faced since pandemic.
âThe consequences of a reassessment during the COVID-19 period will have a potentially detrimental impact on businesses, landlords and even the public sector. This could lead to economic instability given the uncertainty surrounding property tax obligations. It just doesn’t make sense.
âIt is much more economically advantageous to link new ARVs as part of the next reassessment cycle scheduled for 2025 to show levels of COVID-19, where the impact of economic circumstances is clearer, and the economy will have a longer period to recover. “
Mr. Speaker, I am pleased to present at second reading the bill entitled “Land assessment and [Special Provisions and Postponement of Preparation of Draft Valuation List] Act 2020 â.
This bill seeks to modify the effect of the Land Valuation and Tax Act 1967 [âthe 1967 Actâ] in order to extend the period of validity of the current assessment list and to postpone the preparation of the next draft assessment list for Bermuda.
Mr. Speaker, honorable Members know that the assessment list [âthe Listâ] sets the Annual Rental Values [âARVsâ] for properties in Bermuda. The 2015 evaluation list is the current list in effect. Under the provisions of the 1967 law, a new draft assessment list must be drawn up every five years.
An island-wide reassessment is a review of the ARVs of all properties in Bermuda at any given time and the ARVs are the basis for determining the property tax that is payable by property owners.
The next draft assessment list should be filed on December 31, 2020 and enter into force for property taxation purposes on January 1, 2021, thus replacing the current 2015 Assessment List.
Mr President, the COVID-19 pandemic continues to ravage economies around the world and Bermuda has not been spared by this economic tsunami and disaster, with unprecedented levels of unemployment and depressed economic activity across the board. industrial sectors.
For the 2020 Assessment List Draft, ARVs should be based on rental levels as of the earlier assessment date of July 2019, seven months before the COVID-19 pandemic.
Mr. Speaker, an island-wide reassessment based on the pre-COVID rental levels of July 2019 would be extremely painful for businesses and local landlords following the current and continuing economic hardships facing local residents. Bermuda since the pandemic.
The consequences of a reassessment during the COVID-19 period will have a potentially detrimental impact on businesses, homeowners and even the public sector. This could lead to economic instability given the uncertainty surrounding property tax obligations. It just doesn’t make sense.
It is much more economically beneficial to tie the new ARVs in the next reassessment cycle scheduled for 2025 to post COVID-19 levels, where the impact of economic circumstances is clearer and the economy will have a longer period. long to straighten up.
A post-COVID-19 valuation date ensures that the next reassessment period reflects the impact of the pandemic on property values. Given the current volatility in the rental market and the current uncertainty in the economy as a whole, postponing the island-wide reassessment is a sensible and wise move.
Mr. President, countries around the world are using this time to help reduce uncertainty for those affected by the impact of COVID-19 in the form of economic stimulus packages. In addition, carrying out an island-wide reassessment in times of economic instability is not consistent with rating principles and industry best practices.
Therefore, other jurisdictions have acted to reduce the uncertainty in this regard and have postponed their next real estate revaluations. For example, England and Wales postponed their 2021 reassessment of properties to May 2020 and more recently in September Scotland postponed their 2022 reassessment.
The deferral of a reassessment is not new to Bermuda as the 1995 Draft Assessment List was canceled following its filing. Therefore, the 1989 Assessment List remained in effect until replaced by the 1999 Provisional Assessment List, the next five  annual assessment list.
Thus, the postponement of the preparation of the next draft assessment list means that the current 2015 assessment list remains in effect for another five years until it is replaced by the 2025 draft assessment list.
Mr. Speaker, under the provisions of the 1967 Act, there are indeed two occasions when an ARV can be challenged. One is for a new draft assessment list and taxpayers have six months to object to a new ARV on the new draft assessment list. The other opportunity is following a physical modification of a property and a proposal is served to modify the ARV in the evaluation list. Taxpayers have a 28-day objection period in such circumstances.
Therefore, the postponement of the island-wide reassessment will therefore remove the right to object to the draft 2020 Assessment List, as ARVs will remain as is in the current 2015 Assessment List.
Mr. Speaker, I must point out, however, that all taxpayers will always have the right to request a reassessment of their property if there have been any physical changes, such as additions, mergers, splits, demolitions, etc.
Notifications of such construction work are normally triggered by a certificate of use and occupancy permit, but currently a fifth [1/5] of all requests for real estate inspections received by the property assessment service are made directly by the taxpayers themselves.
This practice will not change and the rights of taxpayers will continue to be protected and preserved. Thus, taxpayers will always have the right to both request a reassessment of their properties following physical modifications and the right to oppose any proposed VAR modification made by the Ministry to the 2015 evaluation list. , as they currently do.
Mr. Chairman, it should also be noted that there are no negative financial effects resulting from postponing the preparation of the next draft assessment list. A deferral would in effect secure the existing property tax base without threat as the current 2015 assessment list will remain in effect.
The certainty of $ 85.5 million in revenue from property tax, which is the government’s third largest direct revenue stream, will not be affected or compromised by the proposed extension of the 2015 assessment list. The consistency of property taxation will be maintained as there will be no overall change to 36,000 ARVs and more as happens with each island-wide reassessment.
In addition, the ARV thresholds for retiree exemptions, rent control and property sales to restricted persons would not need to be adjusted due to a new draft 2020 Assessment List and general changes to ARVs.
Mr President, the postponement of the preparation of the next draft checklist is in line with the government’s emphasis on supporting businesses and homeowners affected by the pandemic with economic stimulus and stimulus packages while maintaining consistency and reliability of property taxation and not compromising critical property tax revenues.
Postponing the preparation of the draft 2020 checklist is a sound decision and approach for the country as a whole. Now is not the time for the government to implement comprehensive changes to ARVs that could affect property tax rates at a time when the country needs certainty, consistency and stability.
Mr. Speaker, after these introductory remarks, I now move that the bill entitled “The Assessment and Taxation of Land [Special Provisions and Postponement of Preparation of Draft Valuation List] Act 2020 âbe read the second time.
Thank you, Mr. Chairman.