A proposal to slap a tax on rented homes in the Budget has been taken off the table, the Minister of Finance said yesterday.
Curtis Dickinson made the announcement after complaints that landlords had tried to use the suggested levy as an excuse to raise rents from next month.
He said he had made it clear the residential rental tax would not be implemented to avoid the exploitation of tenants.
The minister told The Royal Gazette he had other plans to boost government revenue.
A joint press release from the Ministry of Home Affairs and Ministry of Finance hours earlier repeated that no decision had been made to implement the levy after landlords' attempts to hike rents were made public.
It said: “This clarification is provided in response to phone calls to Consumer Affairs from tenants reporting that their landlord has informed them that their rent will be increased 'due to the new tax' as of March 1. Consumer Affairs has addressed this behaviour with the offending landlords.”
Mr Dickinson said later that he had decided to go a step further.He explained: “I just thought it was important to be very clear that the behaviour that was referenced in the press release needs to stop, because there's not going to be a rent tax for residential properties.
“The best way to do that was to make a public statement.”
He added: “I was getting a lot of concern on my part around people potentially being taken advantage of.
“I have formulated a view on how I intend to take this forward.”
Mr Dickinson said that his tax plans will be revealed when the Budget was delivered on February 22.
He added that the Pre-Budget report, which included the residential tax proposal recommended by the Tax Reform Commission, was an opportunity to canvass public opinion on proposals.
Mr Dickinson said many people were opposed to the levy which, combined with a tax on commercial properties, was expected to bring in $41 million.
However, he claimed opinions “varied” and others were supportive of the idea.
Mr Dickinson added: “I have figured out that there's probably a more effective way that is balanced, easily implementable and collectable, and has minimal negative impact on the broader economy.”
He said: “I didn't want people to be taken advantage of by folks who were trying to forecast, incorrectly, what it is that's going to be contained inside of the Budget.
“In the Budget, we will be very mindful of our fiscal situation and we will be very prudent about remedies we will put into place to move us in the right direction.”
Mr Dickinson could not confirm how many complaints were made about landlords raising rents.
But he said: “If it was one, one was too many. What I didn't want to have happened is to have people be exploited because of a lack of information so in order to remove the opportunity for people to do that I decided, in the case of the rental tax, to be clear about where we are going.”
Mr Dickinson added that he had “no idea” if a rental tax would feature in future Budgets.
He said: “I need to get through this year first and see how it all plays itself out.”
Paulette Robinson, who spoke out against the tax at a Pre-Budget public meeting last week, said she feared the residential rental tax could return inside the next two years.
She said yesterday: “I want him to remove it permanently ... it's going to come again next year, or the year after that — I'm looking beyond my nose.”
Ms Robinson warned: “They would be taxing the wrong people — if they need to tax, do it elsewhere.”
Nick Kempe, the One Bermuda Alliance shadow finance minister, said: “It was clear there was widespread opposition to the residential rental tax, which was causing anxiety among our elderly population in particular.”
He added: “Although the tax was among a raft of new taxes being considered, Government intended to raise taxes by $50 million in 2019-20 and residential rental taxes were set to raise $26 million.
“So, given that 2018-19 still had a Budget deficit of $89 million and given that Government has not cut any costs, what tax will replace the rental tax after this about-face?”
Mr Kempe added: “This government has already introduced new taxes and it is clear its only plan is to introduce more.”