Property Tax Reform
2-6-13 WOSO Commentary
Everyone knows that property taxes in Puerto Rico are very
low as compared to the States.
At a recent San Juan Rotary meeting, Sergio Marxuach of the
Center for the New Economy proposed increasing real property taxes as one of
the measures to help cover our budget shortfall of some 1.1 billion. His
arguments are persuasive.
First of all real property cannot be hidden. Although Sergio
did not get into this, similar to the States, we would need to develop an
efficient process to ensure that assessments cover all real property at their
fair market value. I do not know how they do it, but Florida adjusts it
assessments annually, and from what I have seen, the new rate is very close to
what a professional appraisal would establish.
Secondly, the tax would be progressive falling on those who
can best pay and we could continue reasonable incentives for home ownership and
productive use.
Thirdly, the tax would incentivate putting inactive property
to use, especially if you incentivate productive use.
Finally, although Sergio did not mention this, the municipalities
would share in the increased revenue thereby helping resolve their deplorable
financial condition that we have been hearing so much about these days.
The reform should be implemented in stages over a period of
years, but at the end of the day, property taxes need to be a more important
and updated component of our Puerto Rico tax system.
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