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
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.