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Over-The-Hill Plan Alert To Fraud Risk

By RASHAD ROLLE

Tribune Staff Reporter

rrolle@tribunemedia.net

THE government is projected to lose $7m in revenue annually through its Over-the-Hill tax exemption policy, Financial Secretary Marlon Johnson revealed yesterday.

Officials, nonetheless, stress the benefits of the programme far outweigh a small revenue loss for a country that generates more than $2bn each year.

Under the programme, residents and businesses making less than $5m per year will be exempt from real property taxes, customs duties on materials necessary for constructing, equipping and completing buildings, excise taxes and stamp duty.

Alcohol and gaming businesses are excluded from the tax benefits.

The bulk of revenue loss will be the result of real property tax exemptions. Yesterday, Dr Nicola Virgill Rolle, director of the Economic Development and Planning Unit in the Office of the Prime Minister, said $6.2 million in real property taxes were collected in 2017 from the area that will be designated an economic empowerment zone beginning July.

During a press conference, Dr Rolle emphasised that rigorous monitoring mechanisms will accompany the programme to prevent leakages and fraud; these include an electronic card system that will limit and track the amount of custom duty exemptions a person or business accesses.

“We’re working with the Ministry of Finance to make sure the exemptions are reasonable,” she said, noting customs duties exemptions are not infinite under the programme. “For example, if you wanted to do an improvement to your home we can pay for the material to construct, dealing with construction or things to equip your business; you’re going to detail your project to the (Department of Inland Revenue) who are then going to work with quantity surveyors to say what is a reasonable amount of money that is going to be expected to do such and such a project and then that will be the amount loaded onto your card for the exemptions to be granted and so it’s all about being reasonable in the approach so we’re not seeing leakages.”

Critics of the programme say it will cause gentrification. A concern is that rental costs will increase as the area becomes more attractive to outsiders and as landowners use the benefits of the programme to refurbish their units.

Dr Rolle, however, revealed the government will build affordable housing units in the area to mitigate such possibilities. Officials also hope landowners, themselves beneficiaries of tax exemptions under the programme, keep rates at affordable levels.

Dr Rolle said: “What we have seen as best in practice for empowerment zones and for communities concerned with issues of gentrification in that way is to always ensure that you promote affordable, decent housing. As we go through our clean up exercises, for example, we are looking to identify tracts of land for affordable housing options. We know we have to upgrade the housing stock anyway to ensure people have decent housing. There must always be a good stock of affordable housing available.”

Dr Rolle said it would take up to three years to mobilise and begin constructing the new affordable housing units.

She said the programme will be monitored and, if necessary, stopgaps will be put in place to prevent unintended consequences like new businesses moving into the area for its benefits and, in so doing, make the environment more challenging for existing businesses.

“It’s very important as the trade certificates are issued to pay attention to trends and to see if that will occur,” she said. “We have built in a process whereby to benefit from the exemptions, it’s not just a blanket, you’re in the zone so you benefit. There is a process that you apply to the Ministry of Finance for the trade certificate which then allows you to benefit from the benefits which will then give us lots of information about whether we’re seeing new changes happening in that so we can monitor trends so we could build in stopgaps.”

In addition to the programme’s economic empowerment component, focus will also be placed on equipping public institutions with smart technology and providing greater access to “broadband, community centres, libraries, health clinics, parks and other recreational facilitates,” among other things.

To accomplish the programme’s goals, $5 million will be budgeted for it annually. Dr Rolle, however, stressed that the goals of the programme also will be accomplished through individual ministries and departments and the annual budget they receive.

Comments

observer2 1 year, 9 months ago

Another windfalll for the webshops who will reinvest their earnings made off the backs of poor over the hill people into over the hill businesses. Tax free.

With the ability of web financed businesses to trade tax free it will put legitimate businesses outside of over the hill at a competitive disadvantage.

But like web shops the profits of those businesses will not benefit the upgrading of over the hill. 5 years from now over the hill will be even poorer.

Keep in mind that 60% of the financial transactions over the hill currently occur in web shops.

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DDK 1 year, 9 months ago

Truly amazing that The People's Government pretends that "web shops" don't exist to the detriment of all except their owners and those in bed with them!!

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observer2 1 year, 9 months ago

The government appears to already be concerned about "unintended consequences" of this policy.

You simply can't ring fence the web shops and out do zone wealthy landlords from participating without killing the project.

Money goes where money lies. Since 1967 and majority rule over the hill has gotten worser and worser.

With almost a thousand web shops and mostly non resident landlords and business owners, how can you stop the money leaving.

Minnie himself is from Bain Town. He now lives in the west. Good for him.

The same is true for shanty towns.

Unless you face the root causes of poverty and remove the businesses exploiting the poor, nothing will change. The rich will get richer and any one that's escapes poverty will immediately leave Bain Town but leave this tax exempt and highly profitable businesses in the area.

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sealice 1 year, 9 months ago

I betcha that PLP can't wait till they back in power and can play "keep the peeps happy" with this giant ... money running out of gubmint .... Loophole.

Another example of how we can't govern ourselves.

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TheMadHatter 1 year, 9 months ago

"...said $6.2 million in real property taxes were collected in 2017 from the area that will be..."

How does she know? How can govt know this tiny detail on such a small amount of money, but they can't tell us where over a billion dollars of VAT money has gone.

Hoping she realizes that due to that, nobody believes her - so she may as well be quiet next time. It's simply embarrassing.

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sheeprunner12 1 year, 9 months ago

Marlon Johnson is already making excuses for the ghetto ........ this is so disheartening.

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observer2 1 year, 9 months ago

This will truly be amazing to watch. It is equal to the foolery surrounding Oban and now drilling for oil which will spoil arguable the most beautiful beaches and rich sea beds in the world.

Have any of these financial wizards in the PM's office ever done a walk about in Bain Town? Did they ever go into the homes without running water, the homes without electricity, the outside toilets, youth unemployment above 50%, teenage girls with babies in hand, everyone totting a $500+ phone, web shops on every corner, schools graduating students without adequate reading and writing skills?

How can you jump from this poor foundation to corporate formation, VAT registration, RPT exemptions, applications for economic relief, capital raising, imports, exports business licenses, accounting and bookkeeping???

The answer is you can't. Unless you are already a business in Bain Town with capital to invest. The only businesses I know that will be able to take full advantage of the tax exemptions are web shops.

This will be easily done by the web shops opening new corporations unrelated to numbers but financed via their numbers earnings.

So, who will benefit? Surely not the poor and disenfranchised residents of Bain Town. The more things change the more they get worse.

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joeblow 1 year, 9 months ago

Education is NOT common sense. There are a lot of educated folks in this country. What this nation lacks most are leaders with common sense!

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birdiestrachan 1 year, 9 months ago

It appears doc does not have a plan that will work. it is talk and talk some more and make no sense. just muddle through. Pie in the sky. until such time.??

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