Tuesday 27 September 2022

Manitoba (Canada) premier penalized for unpaid back taxes on Costa Rica vacation home

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27 September 2022 - At The Banks - BCCR

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Manitoba, Canada, Premier Brian Pallister has been penalized for taxes owing on his vacation home in Costa Rica. Pallister said he failed to update the evaluation of his property as required by Costa Rica law, which meant he didn’t pay the tax on luxury homes.

Manitoba Premier Brian Pallister has been penalized for taxes owing on his vacation home in Costa Rica. Pallister failed to update the evaluation of his property as required by Costa Rica law, which allowed him to escape paying a national tax on luxury homes, he said Friday. THE CANADIAN PRESS/John Woods

“The valuations were supposed to have been, in hindsight, done every three years and you’re responsible for doing them,” Pallister told The Canadian Press on Friday.

“At the outset, we were never advised that we owed anything on this, and actually were told we were not in this (luxury) category, so we had no reason to believe … that we would owe anything.”

Ignorance is no defence, I should have probably looked into it further (earlier)

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Pallister said he has paid what he owed — roughly US$8,000 in back taxes and penalties — after going to Costa Rica last week to clear up the issue that has dogged him for months in the legislature and in the media back home.

Pallister and his wife purchased the property, though a Costa Rica corporation, Finca Deneter Doce S.A., on a hillside in Tamarindo in 2008. The main bungalow measures 3,400 square feet, according to design plans, and has what Pallister calls a “small finished area” in the basement with a piano and TV room.

There is also a pool, a groundskeeper’s quarters and a gym.

The year after Pallister purchased the property, Costa Rica brought in a national tax on homes with a construction value of ¢120 million colones — about US$210,000 dollars.

The ‘luxury’ tax is in addition to local taxes, which Pallister says he has always paid, and its threshold rises each year roughly in line with inflation.

The valuations were supposed to have been, in hindsight, done every three years and you’re responsible for doing them

The luxury tax is complex. It is not based on market value or estimates filed for construction permits, but instead on the type of building material used in each room, the area covered by each material and other factors.

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Though it appears Pallister is good in Costa Rica, back home, in Manitoba, the National Post reports the opposition to his government are unlikely to let the matter go. The New Democratic Party (NDP) raised the issue several months ago and demanded to know whether Pallister had avoided the tax by undervaluing his Costa Rica property.

In April, after repeated questions, Pallister promised to look into whether he should have been paying the luxury tax. He said he finally got the answer last week.

“The valuations were supposed to have been, in hindsight, done every three years and you’re responsible for doing them. Ignorance is no defence, I should have probably looked into it further (earlier),” said Pallister.

“It’s a shame the premier only did that after he got caught,” NDP caucus spokesman Andrew Swan said Friday. “It’s a terrible example for the premier of this province to lead.”

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Over the years since vacation in Costa Rica, Pallister has also drawn criticism for the amount of time he has spent in Costa Rica and for, on at least one occasion, saying he was not there when he was.

He has also been criticized for hard to reach while at his vacation home. An investigation revealed that staff connected with the premier via his wife’s personal email account and cellphone. Pallister later promised to use his own government communications equipment and to reimburse taxpayers for any long-distance costs.

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