The Bermuda Government has raised land taxes to avert a potential $19.1 million loss in revenues brought about by the latest annual rental value figures.

The ARV has fallen due to the recession and the resultant unemployment and a drop in real estate financing by banks, according to Bob Richards, the Minister of Finance.

Land tax rates were thus raised, effective yesterday, after an amendment announced in Parliament.

The Island’s property market peaked in 2008, Mr Richards said, with a subsequent “sharp decline in rental and capital values”.

“In other words, there was a bubble in Bermuda property markets and the bubble has deflated,” he added.

The Land Valuation Department conducted a revaluation of land, after which a 2015 Draft Valuation List was produced.

“The Draft List confirms the widely held opinion that rental values in the open market have fallen between the valuation date of December 31, 2009, upon which the current 2009 Valuation List is based, and the July 1, 2014 valuation date, upon which the 2015 Draft Valuation List is based,” Mr Richards said.

He said the residential assessments were seeing annual rental values below their 2009 assessed levels of rental value.

“The sobering reality is that to maintain government services at a reasonable level and to avoid financial failure, the Government needs to increase land tax rates.”

The rate for properties up to $11,000 ARV will rise from 0.6 to 1.8 per cent, while rates for properties of an ARV of $11,001 to $22,000 rise from 1.2 to 2.5 per cent.

For properties of ARV $22,001 to $33,000, the rate will go from 2.4 to 4.4 per cent, and for the $33,001 to $44,000 bracket, from 4.8 to 6.8 per cent.

For properties of ARV $44,001 to $90,000, it rises from 9.6 per cent to 11.6 per cent, and from $90,001 to $120,000, from 19.2 per cent to 21.2 per cent.

Properties above $120,000 will rise from 23 to 25 per cent.

For Bermudians over the age of 65 who are living in their own homes, the tax exemption will drop from ARVs of $50,000 to $29,000.

To lessen the impact of the revaluation on the land tax revenue on commercial and tourist units, the tax rate will be hiked from 5.5 per cent to 7 per cent, which will keep the taxation at the same level as previously.