28 January 2013

Namibia: Misalignment Caused Exorbitant Land Tax

Windhoek — The Minister of Lands and Resettlement, Alpheus !Naruseb, says there was a technical misalignment in the actual printing of the 2012 Provisional Valuation Roll (PVR) causing excessive land tax valuations.

The ministry withdrew the 2012 PVR, recently, after an outcry from land owners after high land tax values were issued for their land.

According to the technical misalignment in the Computer Assisted Mass Appraisal (CAMA) system, the values pertaining to improvements, which were meant to be deducted from the sales price were not deducted.

"The ministry realised that more than half the number of objections received, about 3 900 had brought about a number of legal issues, which the ministry felt needed consultation with the Government Attorney on the way forward," the minister explained at a media briefing on Friday.

Some of the legal issues that were raised by objectors varied from constitutional to procedural.

Some objectors challenged the whole base or the composition of the land tax from a constitutional point of view, some challenged the partial imposition of the tax to an exemption by a certain group, as well as the basis of the determination of the value in line with the interpretation of the land valuation and taxation regulation.

The ministry is currently reviewing the entire valuation roll and once this is completed a new provisional valuation roll will be put on display again, for public viewing, within the next three months.

It is anticipated the Valuation Court will sit sometime in June 2013.

Farmers are of the opinion that the valuation considers the production capacity of the farm when valuing the property.

"Ordinarily it would be key for us to consider if someone is buying a property to look at the production capacity of that property, however in the current situation that we are having in Namibia we have realised that the sizes do not correlate with the production capacity of that farm. And that's the challenge," Valuer General, Mackay Rigava explained.

However, when valuing land for land tax, Rigava said, there is a requirement that they give due regard to carrying capacity.

"The extent to which we give that due regard will be of course guided by the prices that are being paid. And in our valuation, we are going to distribute values that are going to be realised in those analysis in line with the production capacity of that land," the valuer general said.

Rigava said the ministry is going to ensure by all means that there is some correlation between the values that will come out of that evaluation model and the carrying capacity of a farm.

He said a test run was done on the CAMA to ensure that the actual value that is going to be produced in the valuation roll is the correct value.

"However, I think there was a technical misalignment in the actual printing itself and as a result we ended with this result. There is nothing factually wrong with the CAMA, it is a well-established way of valuing for mass appraisal purposes. And therefore, we want Namibia to be on par with other countries in the world," Rigava added.

The valuer general said the taxation is a statutory process, and is therefore also regulated by statute, whereas the determination of values of land is determined by the possible demand and supply of the market.

"And therefore the tool would definitely to some extent be different. For example, when you value for tax, the regulation says that we should give regard to the locational advantage of the property, that is the property is not far from Windhoek, we should disregard that. We should also disregard the bush encroachment," Rigava explained.

In the open market when someone buys a farm, bush encroachment is considered as an issue that requires a discount.

"Therefore, there will not be a direct correlation but to a large extent, to some extent there will be some indication of the level of value in different production areas for the country," he explained.

Rigava noted that one would be able to determine the difference - when values, for example in Karas Region, are going to be displayed they should be lower than values in the Otjozondjupa Region.

"So there is that relative value throughout the country but to the extent or the magnitude there is no correlation," he explained.

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