The question of whether Jamaica should lean more heavily on property taxes resurfaced at a recent Caribbean Policy Research Institute (CAPRI) forum, as policymakers weigh how to finance the growing cost of disaster recovery without placing additional pressure on the wider economy.

Speaking at CAPRI’s annual budget breakdown forum last week, held under the theme ‘Paying for Hurricane Melissa’, economist Dr Damien King pointed to property taxes as one of the most efficient and underused options available to the Government, even as new revenue measures are rolled out in the wake of the storm.

“When you rank taxes based on how distortionary they are and how difficult they are to administer, the one that rises to the top of the list is property tax. Especially the way we do property taxes in Jamaica…it is almost an obvious target for increased taxation,” Dr King said.

Jamaica belongs to a small group of jurisdictions that levy a Land Value Tax (LVT), which is based on the unimproved value of land rather than buildings or other developments — a feature economists argue creates an underutilised advantage.

Further, a 2018 CAPRI report titled ‘In Search of the Most Efficient Tax for Jamaica’ found that administering property tax costs the Government just 0.3 per cent of revenue, compared to 3.4 per cent for income tax. For businesses, the administrative burden of complying with property tax amounts to about 16 per cent of the tax paid, versus 20 per cent for income tax.

The comments come as the Government moves to introduce new taxes after nearly a decade of holding the line, a change driven largely by the fiscal impact of the hurricane.

Finance Minister Fayval Williams acknowledged that the decision was not taken lightly, but became necessary once the scale of the shock became clear.

“Once we realised the scale…and what our primary balance would be, then we came to that hard decision,” she explained.

The Government has indicated that it needs to generate roughly $30 billion in additional revenue, with a mix of measures now being implemented.

While property tax was not included in that package, Minister Williams indicated that changes to the system are already on the policy agenda, though not immediately.

“It’s going to take the National Land Agency roughly a year,” she said, pointing to the preparatory work required before any adjustments can be made.

Minister Williams confirmed that results from the new land re-evaluation will lead to increased property taxes for the 2027-2028 fiscal year.

That timeline reflects a long-standing issue within Jamaica’s property tax system primarily around the need for updated land valuations and improved records, which have historically slowed reform efforts and limited how much revenue the tax can generate. Meanwhile, a 50 per cent transfer tax break is being introduced for properties in Trelawny, Hanover, Westmoreland, and St Elizabeth to support redevelopment.

Property tax has long been viewed by economists as one of the more stable revenue sources available to governments, particularly because it is tied to land values rather than income or consumption, both of which tend to fluctuate more sharply during economic downturns.

In Jamaica, however, collections have remained relatively modest compared to other tax streams, in part due to outdated valuations and administrative constraints. The tax has also remained a politically sensitive area of reform, particularly following periodic revaluations that can lead to sharp increases in tax bills. Property taxes are the main revenue source for local authorities (parish councils), funding sanitation, street lighting, and road rehabilitation.

The discussion also pointed to a broader rethink of how the tax system should evolve, particularly as more economic activity moves online.

Minister Williams said policymakers are increasingly focused on how to define and capture value within the digital economy, where traditional tax rules are becoming less effective.

“We have to be careful how we define what is digital…because a larger share of every economy is becoming digital,” she said.

Under proposals already outlined in the budget, the Government is moving to extend General Consumption Tax (GCT) to digital services supplied from overseas but consumed in Jamaica, a change that would bring streaming platforms, online subscriptions, and other digital services into the tax net.

The approach follows what is known as the “destination principle”, where taxes are applied based on where a service is used rather than where it is produced, a model now being adopted across a growing number of countries.