September 26, 2018

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'Ignorance no defence'

Pallister pays luxury tax, penalty on Costa Rica home

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 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.”

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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.

Premier Brian 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. (Ruth Bonneville / Winnipeg Free Press files)</p>

Premier Brian 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. (Ruth Bonneville / Winnipeg Free Press files)

"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 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."

The admission comes nearly five months after the Free Press first raised questions about whether the premier owed the tax. Pallister has threatened to sue the newspaper over its stories.

Pallister said Friday 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.

”Ignorance is no defence, I should have probably looked into it further (earlier.)” -Premier Brian Pallister

NDP MLA Andrew Swan said the fact the premier now admits "that he ripped off the people of Costa Rica for 10 years is a terrible example to set for people in Manitoba."

FACEBOOK / Tierra del Sol Arquitectura y Construccion</p><p>The Costa Rican home of Premier Brian Pallister includes a lavish entryway and an infinity pool.</p></p>

FACEBOOK / Tierra del Sol Arquitectura y Construccion

The Costa Rican home of Premier Brian Pallister includes a lavish entryway and an infinity pool.

Swan said Pallister has a financial-planning background and should have been aware of his tax liabilities.

"It's sad that a premier who wants to tell people that it's 'all hands on deck' and everybody's in this together, in so many ways, has shown that he doesn't actually put that into action. This is a premier who thinks there's one set of rules for everybody else and one set of rules for himself," Swan told the Free Press.

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.

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.)"

'Looks like damage control'

Paul Thomas, a Winnipeg political scientist, said Pallister could have put the story to bed months ago.

"If he was initially ignorant of the law, once he was made aware of it he should have acknowledged the liability," Thomas said. "Picking a fight with the Free Press over the issue was not a politically smart move."

FACEBOOK / Tierra del Sol Arquitectura y Construccion</p><p>Costa Rica home of Manitoba Premier Brian Pallister.</p>

FACEBOOK / Tierra del Sol Arquitectura y Construccion

Costa Rica home of Manitoba Premier Brian Pallister.

Releasing the information on the Friday of a long weekend "looks like damage control," Thomas said.

"Sophisticated communications strategies and tactics are not the forte of this premier and his government."

Ten days after the Free Press first raised allegations about Pallister's Costa Rican tax situation, the premier served the newspaper with a legal notice of a possible defamation suit. In order to avoid any legal action, his lawyer, Robert Tapper, made a number of demands on the newspaper, including a front-page apology and a requirement that the paper reveal its source.

"The Free Press was right to raise an issue about whether the premier’s company paid taxes it owed on its Costa Rican property. And finally after months of waiting and threats of legal action against us for asking those questions, we have the answers that the public deserved," Free Press editor Paul Samyn said Friday.

 After demanding front-page apology, it's Pallister who owes one: Lett

Click to Expand

When politicians are forced to reveal something embarrassing, controversial or overtly negative, they typically wait until late on Friday afternoon and then — in the parlance of backroom politics — they "take out the trash."

It’s a well-worn and somewhat cowardly strategy to catch news media off guard and, with some luck, suppress coverage to dampen consequences. Sometimes, it actually works. Many other times, however, it only serves to make a bad situation worse.

read more

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 — and above. 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.

FACEBOOK / Tierra del Sol Arquitectura y Construccion</p><p>Costa Rica home of Manitoba Premier Brian Pallister.</p>

FACEBOOK / Tierra del Sol Arquitectura y Construccion

Costa Rica home of Manitoba Premier Brian Pallister.

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.

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.

Larry Kusch

Larry Kusch
Legislature Reporter

Larry Kusch didn’t know what he wanted to do with his life until he attended a high school newspaper editor’s workshop in Regina in the summer of 1969 and listened to a university student speak glowingly about the journalism program at Carleton University in Ottawa.

Read full biography

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