BY Alicia Dunkley Observer staff reporter dunkleya@jamaicaobserver.com

The Government yesterday made another attempt to stimulate Jamaica’s flagging real estate market by moving the original January 1, 2010 implementation date for the further reduction in stamp duty and transfer tax fees to August 1 this year.

In May of 2008, the administration announced that Stamp Duty would be reduced from 5.5 per cent to 4.5 per cent and Transfer Tax from 7.5 per cent to six per cent.

Subsequently, in January of this year in reaction to the global financial crisis it further reduced the Transfer Tax from six to five per cent as part of a stimulus package.

Making his budget presentation in April of this year, Finance Minister Audley Shaw disclosed that the rates of Stamp Duty would be further reduced to 3.0 per cent and 4.0 per cent respectively with effect from January 2010 to further assist in stimulating the Jamaican real estate market, even though the anticipated revenue loss from this move would be $644 million.

But speaking in Parliament yesterday, Shaw said following on this announcement the Tax Administration Department of the ministry “has reported a drastic reduction in transactions resulting in further revenue loss and a slowdown in real estate business”.

“Consequently, the Cabinet has decided to bring the implementation date of the further reduction in Stamp Duty and Transfer Tax forward to August 1,” he said.

“In retrospect, it was too long a time to seek to implement it by January 1 and there was more than anecdotal evidence that some persons were holding on and awaiting the new date and there is no question that there was also a level of depression,” Shaw admitted.

“With this proposed implementation, the Stamp Duty and Transfer Tax will have been reduced by almost 50 per cent since this administration took office in 2007,” the finance minister noted.

According to Shaw, the initiative would be supported by continuing efforts to a accelerate the application and approval process in the housing and construction industries.

He said purchasers and vendors of real estate are being encouraged to take advantage of the “significantly reduced cost of real estate transactions in order to stimulate the real estate and construction sectors and create jobs”.

Meanwhile, Opposition spokesperson on finance Dr Omar Davies queried whether the reduction being experienced was because persons had held back on transactions to wait on the January 2010 rollback or because of the economic downturn.

“I wouldn’t want you to take the right action based on the wrong analysis, so it would be useful to see whether the downturn started before your announcement in April so we can determine the appropriate action to stimulate recovery in the real estate market,” Davies said.

Central Kingston Member of Parliament Ronald Thwaites, however, said the Government had erred in announcing the reduction for next January.

“Because everyone who could, simply elongated the period for completion of real estate transactions to a date soon after January 1,” he pointed out.