Posted: 10 Feb 2011 01:13 PM PST

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King County residents can expect to receive their 2011 property tax bills during the week of Feb. 14.

Posted: 09 Feb 2011 04:39 PM PST

Residential property in Preston, Sydney. Picture by Dean Marzolla Source: The Australian

PROPERTY taxes are the best way for governments to raise the extra revenue needed to reduce their debts without hurting growth, a group of economists who work at the Organisation for Economic Co-operation and Development said in a paper published overnight in London.

Five OECD economists, working with Christopher Heady from the University of Kent in Britain, examined the impact of tax changes in 21 developed economies over the last 34 years.

Writing in the Economic Journal, they concluded that recurrent taxes on property, especially homes, were the best option for raising additional revenues, although they acknowledged that such taxes were politically unpopular.

As an alternative, they said governments should eliminate widespread exemptions to sales taxes, another move that could prove politically difficult at a time when food prices are already rising rapidly.

"Any necessary increases in revenue after recovery would be least harmful to growth if they were based on increasing recurrent taxes on immovable property and consumption taxes, especially if this took the form of reducing exemptions and rate reductions," the economists wrote.

The OECD economists said the current favourable tax treatment of home-ownership boosts investment in residential property at the expense of more productive alternatives.

"This implies that increasing recurrent taxes on immovable property will shift some investment out of housing into higher-return investments and so increase the rate of growth," the economists wrote.

Politicians of all persuasions have long encouraged investment in residential property through tax exemptions and other measures, and some economists believe that that very encouragement has contributed to the sharp rise in house prices and increased mortgage-lending that led to the financial crisis of 2007 and 2008.

The OECD economists said the use of recurrent taxes on property vary widely within developed economies. In Britain, they take the form of the annual council tax linked to the value of the property, with revenue going to local governments.

"While it is unlikely that those countries with already high levels of such taxes will want to increase them, there is considerable scope for raising them in other countries," the economists said.

But their recommendations are not entirely bad news for home owners. The OECD economists said taxes on housing transactions - such as stamp duty in Britain, which is charged on home purchases - discourage the best use of housing, and also reduce labour mobility, both developments that hurt growth.

"Property taxes in general are likely to be more harmful to growth than recurrent taxes on immovable property," the economists wrote.

If politicians aren't prepared to risk the wrath of home owners by hiking property taxes, the OECD economists said the next best option would be to remove exemptions on items such as food, childrens' clothing and other goods and services that are deemed to be essentials, rather than discretionary purchases.

The economists acknowledge that the removal of essentials will be criticised for hitting lower-income households particularly hard.

"Some of these...reductions are designed to reduce the apparent regressivity of the tax, but they are poorly targeted because rich people spend more than poor people on these goods," the economists wrote. "From a distributional - as well as efficiency - point of view, it is better to have a uniform VAT on a broad base and use some of the additional revenues to assist low-income households, which would still leave a substantial revenue gain to the government."

The economists said that purely from the point of view of boosting growth, cuts in income taxes and social security contributions for low-paid workers are the best option. But faced with a mountain of debt, few governments are considering tax cuts right now.

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'Mariana House may now be subject to property tax'

Posted: 10 Feb 2011 06:14 AM PST

Thursday, February 10, 2011

AFTER SITTING IDLE FOR TWO YEARS

'Mariana House may now be subject to property tax'

The CNMI government's Mariana House in Washington, D.C. could be subjected to property tax if it loses its tax-exempt status because it has been sitting idle for two years. There have also been recent complaints of it being rat infested.

Because of this, the CNMI government should "invest in this property," said former resident representative and governor Juan N. Babauta.

"If we start paying tax, we will use taxpayers' money to pay for it. That's why we have to invest in it so it could pay for itself," Babauta said when asked for comment yesterday.

Rep. Froilan Tenorio (Cov-Saipan), Rep. Ray Yumul (R-Saipan), and other lawmakers earlier said the government should sell or lease out the property, which they say is in a prime location near embassies in the nation's capital.

The Fitial administration has yet to decide what to do with the property.

The property has been sitting idle since it was vacated in early January 2009 by the CNMI's last resident representative to Washington, D.C. Pete A. Tenorio. That was when the 2008 federalization law gave the CNMI its first nonvoting delegate to the U.S. House of Representatives.

Babauta said during the time of his predecessor as CNMI resident representative to Washington, D.C., Froilan Tenorio, there was a pending case in federal district court regarding the tax-exempt status of the property.

"When he left office, the matter was still pending. It took me almost a year before I could convince the court that Congress meant for the building to be used for official representation and should therefore be granted tax-exempt status," he said.

Babauta served as the CNMI's third resident representative to Washington, D.C. starting January 1990. He served for three, four-year terms until January 2001 when he became CNMI governor.

The Fitial administration is now working on getting the property fixed, including hiring a pest control company, before it could hire the services of an appraiser to determine the property's value.

Press secretary Angel Demapan said the CNMI government spent $300,000 to buy the property, based on information from Lt. Gov. Eloy S. Inos, a former Finance secretary.

Babauta and his former lieutenant governor, now House minority leader Diego Benavente (R-Saipan), separately said yesterday that the property was bought for $200,000.

Washington, D.C. tax records list the property as "E6-Foreign," and the proposed new value for 2010 is $835,430, including the value of the land and improvements.

But because the CNMI government has yet to commission its own appraiser to assess the value of the property, officials could only estimate its current value.

Demapan said the current condition of the Mariana House is not a case of oversight or it being forgotten.

"Since the close out of the Washington Representative's Office, the administration was informed about a host of much needed repairs that need to be done before the property can be deemed as adequately rehabilitated in order to be in compliance with building code before it can be placed on the market. Once these deficiencies are addressed, then the government can acquire the services of an appraiser to determine the property value," he said.

Gov. Benigno R. Fitial will be in Washington, D.C. later this month on official business, but Demapan said that, given the governor's tight schedule, there's no telling whether he could visit the Mariana House.

"I can't confirm that he will be able to visit the property at this time, but I'm sure that he would like to if there is an opportunity to do so," he said, adding that besides the National Governors Association meeting, Fitial would like to meet with federal officials such as those at the Department of Homeland Security and the Department of the Interior.

The Mariana House is located at 2121 R Street NW Washington, D.C.

Demapan said the administration has not received offers to sell or lease the property.

Public Auditor Mike Pai had said in February 2009 that the CNMI government is going to keep the house due to the unfavorable real estate market. He said it could be rented out at $10,000 to $15,000 a month.

The property has since been vacant and has not been maintained. Community members said this is one property that the government should not have left to rot, considering its tight financial conditions.

Property Tax

Thursday, February 10, 2011

“Property taxes increase slightly in 2011 due mainly to voter-approved levies” plus 2 more

“Property taxes increase slightly in 2011 due mainly to voter-approved levies” plus 2 more

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