Manitoba premier penalized for unpaid back taxes in Costa Rica
Manitoba Premier Brian Pallister speaks during his cabinet shuffle at the Manitoba Legislature in Winnipeg on August 1, 2018. (THE CANADIAN PRESS/John Woods)
Steve Lambert, The Canadian Press
Published Friday, August 31, 2018 4:31PM EDT
Last Updated Friday, August 31, 2018 10:32PM EDT
WINNIPEG -- Manitoba 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 a national tax on luxury homes.
"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."
Pallister said he has paid what he owed -- roughly $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 was unable to provide documents Friday to show the amount owed and paid. He said he expected to receive them next week.
The premier and his wife purchased the property 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 $275,000. The 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 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.
The tax also relies somewhat on the honour system. Residents are left to file their own property assessments. The Costa Rican government brought in a pilot project crackdown in 2017 on homeowners in one part of the country who had failed to file proper assessments.
A list of those who have failed to pay the tax is updated monthly by the Costa Rican government on its website. As of July, it did not include Pallister or his holding company, Finca Deneter Doce Sociedad Anonima.
Pallister may be hoping to put the matter behind him, but the Opposition New Democrats are unlikely to let the matter go. The NDP raised the issue several months ago and demanded to know whether Pallister had avoided the tax by undervaluing his 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.
"Ignorance is no defence, I should have probably looked into it further (earlier.)"
NDP caucus spokesman Andrew Swan said Pallister only acted after a lot of pressure.
"It's a shame the premier only did that after he got caught," Swan said Friday.
"It's a terrible example for the premier of this province to lead."
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 not being easy to reach while at his vacation home. Documents obtained through the freedom-of- information act last year showed 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.