WEDNESDAY, MARCH 14: Cutting tax breaks for pensioners with bigger cars and houses was fair — but the concessions should have been better organised in the first place, according to seniors’ campaigners.
They added that consideration should also be given to keeping tax breaks for seniors with large, but older, cars.
Marian Sherratt, former executive director of the Bermuda Council on Ageing, said: “They are clawbacks — my opinion is that they were concessions which were not properly thought through in the first place. If you can afford to drive a great big SUV, you should be able to afford the tax on it.”
But Ms Sherratt, Age Concern’s Claudette Fleming and OBA seniors spokeswoman Louise Jackson all said exemptions could have been made for people who might own an older, larger car which they have hung on to, either because they can’t afford to replace or it or they need to carry things like wheelchairs.
Ms Sherratt said “There may be some unintended consequences and hardships from the clawback, but there does appear to have been abuse of the vehicle licence concession.”
Ms Sherratt knew one widow on a pension who had looked after the 12-year-old larger vehicle that had been the family car and had “benefited greatly” from the concession.
“Possibly they could use some kind of grandfather clause or people could apply for exemptions based on the age of the vehicle.”
Ms Fleming said Age Concern was “saddened” by the abuse of the car concession, which led to a huge jump in the number of seniors registering large cars, but was pleased that smaller vehicles remained licence tax-free.
She added: “There are some persons who require larger vehicles for medical reasons and we would like for special consideration for full exemptions for people who fit into this category.”
Ms Jackson said: “Seniors who have cars that are five years or more old certainly should have some kind of concession.
“The fact that there are seniors who have large cars, but many bought these larger cars years ago when a spouse was still alive or they had families to transport.
“A spouse may die and the other is left with a big car and the big bills that go with it.
“Many seniors are on small pensions and who really can’t afford this. There are also very wealthy people who can certainly afford to pay. Others have bought larger cars for wheelchairs or a for a car they can get into easily – again, a means test would have made far more sense.”
They were speaking after Premier and Finance Minister Paula Cox announced that land tax and vehicle licence exemptions for seniors would be reduced as part of Budget cutbacks.
The changes in the tax breaks mean that seniors who own a home with an Annual Rental Value (ARV) of more than $50,000 will lose their land tax concession.
Similarly, only seniors who drive smaller cars – in the A-D tax groups – will continue to get a break on vehicle licence fees, while those with bigger cars will pay the full amount.
Ms Jackson said: “These were very ill-thought out and ill-conceived in the first place.”
She added that, instead of a blanket exemption, the tax breaks should have been means-tested to ensure that people who needed help would get it.
But Ms Sherratt said that Bermudians were historically “proud and very private” and would not undergo means testing, even if they were likely to qualify.
Fred Hassell, of the Bermuda Senior Islanders’ Centre, said: “The means testing thing has never gone down well in Bermuda – I know in other jurisdictions they have means testing, I don’t know what’s so peculiar about Bermuda.
“Maybe we need to look at going down that road before concessions are made and then withdrawn.”
But Mr Hassell said: “A lot of the people I’m involved with have smaller cars. Those who have bigger cars don’t seem to make any objection or complaint.”
Housing policy
Meanwhile, on the removal of tax breaks for houses with ARVs of more than $50,000, Ms Fleming said: “Additional tax burdens are never a welcomed element of any budget. We are, however, pleased to see that those seniors with homes that are valued the least will continue to receive full exemption from land taxes.”
Ms Sherratt added that government should not be giving “exemptions to people with very large houses” particularly in the current economic climate, but that leaving concessions for smaller properties was “a reasonable compromise.”
Ms Jackson added that people with larger homes may now be a widow or widower and struggling to pay the bills from pensions.
She said: “The same thing applies and means testing should apply. Government promised all these things to seniors and then they turn around because they can’t pay their debt and they hit our most vulnerable population – seniors, which I find very sad.”
Ms Jackson added that many homes included in the $50,000 ARV or above bracket were now worth less – and that a revaluation of the banding should be carried out: “The ARV might have a house valued at $1 million, but, in the current market, quite a few homes will no longer be in the same bracket.”
Ms Jackson added that selling a larger home to move to a smaller house or an apartment was also difficult, given the slow-down in the real estate sector.
Government announced, however, that seniors who own their own homes will now be eligible to apply for Financial Assistance – which was welcomed by seniors watchdogs.
Ms Jackson said: “I have been pleading with Government for years to do something about this. There are so many seniors who are land rich but cash poor.”
Mr Hassell said: “If people are living in a house – and there are some people who have property wealth but no income derived from it – I don’t know how that works. You may see more people applying for Financial Assistance who are living in that kind of situation.
“I can’t see the system crushing them down because they built a nice house and are now looking for assistance – I don’t see a government doing that.”
Ms Sherratt said that older people in very large houses should not have been exempted from the tax in the first place.
She added: “Some concessions are still in place and I think that’s a reasonable compromise.”