Every year, when property assessments come out, so does the chorus of those wanting the CAP (Capped Assessment Program) removed. Most municipalities want it removed because it will mean more tax revenue for them, generated through their Property Valuation Services Corporation.
Their arguments about “fairness” are specious and hypocritical. The same municipalities benefited when assessments, fuelled by hot housing and property markets, spiralled upwards in the 1990s, resulting in escalating property tax bills for Nova Scotians. In 2005, the provincial government finally stepped in with the CAP to keep property taxes manageable. They subsequently tied CAP’d assessments to the rate of inflation. This made sense since most people’s incomes are also tied to the rate of inflation. Otherwise, property tax bills were increasing beyond many property owners’ ability to pay.
Most property owners’ wealth is the equity entrenched in their property. That equity is only fully redeemed upon sale of the property. But municipalities target that equity annually by basing assessments on speculative market values.
I believe “fair” assessment reform would base assessments on the verifiable cost of the services individual municipalities provide to property owners. After all, that is what municipal tax revenue is supposed to be used for.
The municipality can factor in operating costs, capital expenditure planning and municipal grants. It can all be transparent. This will solve the issue of new property owners entering the market and paying higher property taxes than their neighbours since the assessment is no longer based on what they paid for their house but on the services they receive.
If the level of services within a municipality vary, the assessments should reflect that. Fairness. This will also stop penalizing those who make improvements to their properties — work that usually increases economic activity for goods and services, something we need to encourage. That activity also generates more HST revenue. If the government wants to offer property tax relief for some, use the income tax system — either revenue from high-income earners or tax credits for those less well off — to provide individual property tax relief when justified. It’s all possible if the political will is there.
Daryl Gray, Bayswater
