Archaic valuations major obstacle for local authorities
By Daniel Da Costa
Stabroek News
June 17, 2003

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The most important source of revenue for all Municipalities and Neighbourhood Democratic Councils [NDCs] throughout the country is the collection of rates and taxes. But it is also the most archaic, troublesome and litigious of all the Local Government systems.

It is on the collection of rates and taxes that Local Government bodies depend to run their offices, pay their staff, provide and maintain infrastructure, including properties. However, over the past two decades collections in most Municipalities and NDC areas have been on the decline averaging below 50 percent. Many describe their financial status as “cash-strapped” while some have since become bankrupt, surviving only through the availability of overdrafts at some commercial banks.

Unfortunately the last time properties were appraised in Municipalities for rating purposes was in 1975. A similar exercise was conducted in 1984 in the then Village Council areas. Back then one US dollar was exchanged for around $3.00. Today the rate hovers at around $196-$197 to one US dollar. Since then the cost of almost everything has skyrocketed beyond the pockets of a large section of the Guyanese populace.

One of the very few things that has remained stagnant is the value of properties. Those valuations are now considered by local officials as ridiculous. Some large businesses and hotels in some Municipalities today pay around $33,000 annually in rates and taxes having been valued for rating back in 1975 at around $5,000. Owners of residential properties in Municipalities within East Berbice pay approximately $5,000 annually in rates and taxes.

At a press conference earlier this month, Local Government Minister Clinton Collymore warned that municipalities needed to change their method of valuing properties or risk losing financing available under the Urban Development Programme.

A report submitted by a team from the city of Huntsville, Texas to the New Amsterdam Town Council last April described the town as “broke”. The Council’s 2001 Budget projected revenue at $107.6 million. But the team described this amount as being inflated. “The reality is that revenues are closer to $35 to $45 million. This is because delinquent rates of $31.5 million cannot possibly be collected without long-term sustained collection efforts,” the report stated. “The general rate of $24.4 million will not all be collected. In fact only $12-18 million will be.” The Town Councils each receive $10 million annually in Government subventions while the NDCs receive $3 million each.

The dilemma confronting most Councils is the fact that they are not only forced to operate with the antiquated valuations, but have been unsuccessful in convincing property owners to pay their annual rates and in collecting delinquent rates.

In an effort to redress the situation the intention was announced to reactivate the Parate Execution legislation which authorized Councils to sell the properties of defaulting ratepayers after due process. Its reinforcement has however been delayed as it awaits the completion of the work given the Joint Task Force on Local Government Reform.

Without a doubt this situation has seriously affected the provision of basic services, efficient and effective management and development in most if not all rural communities over the past two decades. In some cases NDCs and Town Councils have been unable to pay the wages and salaries of their employees for months. Some are forced to utilize the subventions received from Government to pay salaries and to execute a few small projects in their areas.

And many NDCs are staffed by only two officers - an overseer and a clerk - rendering them almost ineffective. The salary scale of these officers also leave much to be desired with overseers earning approximately $24,000 per month and rate collectors around $16,000.

The situation has been further aggravated since hundreds of new buildings including businesses have been erected across the country since 1975 and are yet to be assessed for rating purposes, depriving the Councils of much need additional revenue.

In one NDC area on the West Coast of Berbice approximately 300 buildings are outside of the tax base because of this lapse. A source from the Chief Valuation Office told this newspaper that the Council should inform the office whenever a new building is erected and an officer will be dispatched to the area to make the assessment. Stabroek News understands that this office is however severely under-staffed and incapable of meeting the countrywide demands. However several officials from a number of Councils were adamant that they have been submitting lists of newly-constructed buildings to the Chief Valuation Officer but no action has been taken in relation to assessments of these properties. The source was unable to say when a valuation exercise will be conducted in the NDC areas across the country to update the old properties and regularise the new ones.

Some action however has been taken in the Municipalities under the Urban Rehabilitation Programme to reform property tax assessment. The exercise was launched last year in the six Municipalities. In New Amsterdam, Rose Hall and Corriverton the field data collection and the dummy assessment list have been completed.

At Anna Regina property valuation is in progress while at Linden the dummy list verification of addresses and owners has been completed. In the capital the dummy list is complete with 40 percent of the buildings survey completed.

According to some NDC and Municipal officials, most of the buildings in a number of new housing schemes in East and West Berbice have not been assessed and therefore no taxes are paid on them. “This is a major source of revenue for us and we are losing millions of dollars because hundreds of buildings have not been assessed for the past two decades.

Yet no one seems concerned or prepared to address this situation. However we are blamed on a daily basis for not doing anything in our areas while some Councils are being replaced with Interim Committees.”

Critics of the Councils have long accused them of poor management and deficiencies in their financial planning and administration processes and systems. Their staff, they say are not qualified and lack the necessary training and competence to discharge their responsibilities efficiently.

Others have been accused of malpractices, corruption, financial irregularities, poor leadership and of serving political masters instead of the people in their communities. Meanwhile, some NDCs are calling for a countrywide assessment to redress what they consider as an injustice to them.

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