Colum­nist Jim Guy says CBRM’s CAP sys­tem needs to change. Find out why.

Be­ing a prop­erty owner in Cape Bre­ton is not equal to prop­erty own­er­ship ev­ery­where else in the prov­ince

Cape Breton Post - - CAPE BRETON - Dr. Jim Guy, au­thor and pro­fes­sor emer­i­tus of po­lit­i­cal science at Cape Bre­ton Univer­sity, can be reached for com­ment at jim_guy@cbu.ca

In Fe­bru­ary, Cape Bre­ton Re­gional Mu­nic­i­pal­ity (CBRM) coun­cil threw its sup­port be­hind the for­ma­tion of a com­mit­tee of the Nova Sco­tia leg­is­la­ture to take a hard look at the capped as­sess­ment pro­gram (CAP).

The coun­cil joins The Union of Nova Sco­tia Mu­nic­i­pal­i­ties and the As­so­ci­a­tion of Mu­nic­i­pal Ad­min­is­tra­tors in call­ing for a re­view.

Af­ter 11 years in op­er­a­tion the CAP has pro­duced ma­jor dis­crep­an­cies when taxes are ap­plied to com­pa­ra­bly as­sessed prop­er­ties in the CBRM.

CAP un­der­mines the ef­fi­ciency of its own eval­u­a­tion sys­tem – a pro­vin­cial sys­tem used as the ba­sis for de­ter­min­ing prop­erty val­ues, ul­ti­mately to raise rev­enues for mu­nic­i­pal gov­ern­ments. But the CAP is also part of the equa­tion used to cal­cu­late the net worth of pro­vin­cial as­sets. These as­sets de­ter­mine the bor­row­ing ca­pac­ity of the prov­ince.

The pub­lic is gen­er­ally con­fused about the logic and ac­cu­racy of as­sessed prop­erty val­u­a­tions. Rec­on­cil­ing “mar­ket” and “as­sessed” val­ues is as much of a chal­lenge for prop­erty own­ers as it is for the prov­ince to de­ter­mine its net worth.

Eco­nomic con­di­tions vary con­sid­er­ably from one com­mu­nity to the next across the prov­ince. These in­di­ca­tors di­rectly af­fect the real val­ues of our homes and busi­nesses. De­clin­ing pop­u­la­tion, high un­em­ploy­ment and busi­ness clo­sures erode all lo­cal prop­erty val­ues. Per­cep­tions of the hous­ing mar­ket – say in the CBRM in con­trast to Hal­i­fax – are so dra­mat­i­cally dif­fer- ent that com­par­isons are al­most mean­ing­less.

Prop­erty own­ers are in­clined to spec­u­late up­wards on what­ever value is as­sessed on their homes. But many home­own­ers be­lieve that Prop­erty Val­u­a­tion Ser­vices Corp also spec­u­lates up­wards in com­mu­ni­ties with slow-growth. But in re­al­ity it’s what the mar­ket will bare that holds the truth about what our homes are re­ally worth.

The sys­tem has proved to be a dis­in­cen­tive for buy­ers both young and old. New home­own­ers would ac­tu­ally help re­verse de­clin­ing pop­u­la­tion trends. The CAP was orig­i­nally in­tended to pro­tect home­own­ers from the shock of sud­den in­creases in the as­sess­ment val­ues on their homes, re­sult­ing in higher mu­nic­i­pal taxes.

But the cur­rent CAP sys­tem dis­torts the prin­ci­ple of fair­ness: There is dif­fer­en­tial tax­a­tion of com­pa­ra­ble homes in the same neigh­bour­hoods, even on the same street. The glar­ing in­equities are ev­i­dent on houses re­ceiv­ing the same mu­nic­i­pal ser­vices but at very dif­fer­ent lev­els of tax­a­tion.

Re­mov­ing the CAP too quickly will shift the shock of spik­ing tax lev­els to older and re­tired res­i­dents. The CBRM Prop­erty Tax­pay­ers As­so­ci­a­tion is jus­ti­fi­ably con­cerned about what would hap­pen to these peo­ple if the cur­rent as­sess­ment pro­gram is re­moved too quickly.

Tip­ping the bal­ance on the prop­erty tax bur­den may re­sult in many lo­cal se­nior home­own­ers los­ing their homes. Adding higher tax lev­els to the tight bud­gets of re­tired seniors is an un­fair con­se­quence of a flawed mu­nic­i­pal tax sys­tem.

Just as im­por­tant as dis­cussing the CAP is ex­pos­ing the in­equities of mu­nic­i­pal tax sys­tems across the prov­ince and in Cape Bre­ton. A key ques­tion to ask is why are res­i­den­tial and com­mer­cial tax rates so dif­fer­ent across the prov­ince?

CBRM ur­ban res­i­den­tial rate is $2.28, the ru­ral rate is $1.66. Move to Lunen­burg County and your pay­ing an af­ford­able $0.81 res­i­den­tial. Ch­ester will get you a $0.66 res­i­den­tial rate. Be­ing a prop­erty owner in Cape Bre­ton is not equal to prop­erty own­er­ship ev­ery­where else in the prov­ince. We pay a lot more for the same or com­pa­ra­ble ser­vices.

Much of this is a re­flec­tion of the prov­ince’s mis­ap­pro­pri­a­tion of equal­iza­tion trans­fers from the fed­eral gov­ern­ment. Un­til the pub­lic gets savvy and de­mands a full ac­count­ing of the prov­ince’s con­sti­tu­tional re­spon­si­bil­i­ties with this money, get ready to pay even higher mu­nic­i­pal taxes in a con­fus­ing prop­erty eval­u­a­tion and mu­nic­i­pal tax sys­tem.

Jim Guy Po­lit­i­cal In­sights

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