Landlords were warned today not to pass a proposed rental tax on to their tenants.
The Government said tenants have called Consumer Affairs reporting that their landlord has informed them their rent will be increased “due to the new tax” from March 1.
However, the Government stressed that the tax, outlined in the Pre-Budget report, is only a proposal at this stage.
A spokeswoman said: “Consumer Affairs has addressed this behaviour with the offending landlords.
“It should be noted that if Consumer Affairs receives a report of any effort by a landlord to impose an increase on a tenant related to the proposed tax, it will be swiftly investigated.
“If a landlord is found to be doing this, then such actions would be classed as ‘a false, misleading or deceptive consumer representation’ under the Consumer Protection Act 1999 Part III Clause 11.”
The new rental tax was included in recommendations from the Tax Reform Commission and mentioned in a Pre-Budget report from the Ministry of Finance last month.
It would introduce a 5 per cent levy on rental income from properties with an annual rental value above $22,000.
It would also apply to property owners if they own multiple properties with a combined ARV of more than $90,000, even if the ARV of the individual properties is below the $22,000 threshold.
The TRC predicted the tax would generate about $41 million a year.
Finance minister Curtis Dickinson, who will deliver the Budget on February 22, has stressed no final decision had been made on the tax.
Mr Dickinson has said a need to increase Government income must be balanced against extra burdens on people who were already struggling.
The Government said in its statement today: “Consumer Affairs has received several telephone calls from concerned members of the public over the past few days regarding the proposed rental tax cited by the Minister of Finance during his Pre-Budget Report.
“The Ministry of Finance and the Ministry of Home Affairs wish to clarify several points. Firstly, residential units that fall under Rent Control, with an ARV of $22,800 or less, would not be impacted by the proposed tax.
“Secondly — and perhaps most importantly — the rental tax was only a proposal that was being considered as part of the pre-Budget consultation process. The Government has not announced a decision on this yet and will not do so until the Budget is read on February 22.”
The spokeswoman said: “The proposed rental tax was simply a recommendation of the Tax Commission that was added to the Pre-Budget Report, along with other tax proposals.
“It was included in order to extract public feedback, which we have been pleased to receive. It should be stressed that no decision has been made by the Government to implement it at this time.”
For more information on rent control, visit www.landvaluation.bm.