The International Monetary Fund (IMF) has disclosed that new and recalibrated property tax rates and bands will be submitted to Cabinet by the end of December 2016.

The changes are a part of new structural benchmarks introduced this year aimed at strengthening property taxes, which the IMF said in its 13th review of the Extended Fund Facility arrangement with Jamaica “are shown to be more progressive and efficient”.

“There is scope to strengthen the property tax system and phase out the distortionary stamp duty and asset transfer tax,” the IMF noted, while pointing out that the annual property tax, which yielded on average about 0.4 per cent of GDP over the last three years, is “well below the average yield of 0.8 per cent in other emerging markets”.

Property tax was last increased on April 1, 2013. Properties with an unimproved value of up to $100,000 are currently charged a flat rate of $1,000.

Properties with values exceeding $100,000 up to $1,000,000 attract an additional 1.5 per cent for every additional dollar above $100,000.

Properties with values exceeding $1,000,000 attract an additional 2.0 per cent for every additional dollar.

The IMF in its review said higher yields from property taxes could provide room to replace the “more distortionary stamp duty and transfer tax”.

Transfer tax is now four per cent of property value while stamp duty is three per cent. Transfer tax is levied on the seller of the property, while the stamp duty and registration are shared 50/50 between vendor and purchaser.

The new structural benchmark proposes that responsible officers complete and submit to Cabinet the new rates and bands for property taxes, using the 2013 land valuations, by the end of December 2016.

The move is in the context of the shift from direct taxation. In other moves to introduce a more efficient tax base, the Government, in May of this year, increased the Special Consumption Tax on petroleum by $7 per litre and introduced a new taxation regime for heavy fuel.