Nova Scotia municipalities never get tired of complaining about the property tax assessment cap. It’s too bad they spend so much time pining for the good old days — for them, anyway — when spikes in assessed property values could mean windfall revenues, and so little time trying to come to grips with the inherently flawed nature of the property tax system.
e latest exercise in self-serving, imsy logic from municipal o cials is that the current cap system hurts young, rst-time buyers or seniors looking to downsize.
ose groups, the argument goes, may not factor in the fact a property’s assessment for tax purposes resets to its market value when it’s sold, which could mean far higher property taxes than its previous owners had paid.
Without a cap, taxes on a newly purchased property would be clearer to buyers beforehand, this argument seems to suggest. And because the overall tax rate would likely be smaller than under a capped system, municipal o cials have argued before, property taxes on that newly purchased property might well be lower, too.
First, it’s hard to believe any home buyer wouldn’t be aware — including being informed by their lenders and lawyers — that they will have to pay property taxes based on the new, reset value of the house they’re buying.
And in an uncapped universe where changes in property taxes are based entirely on changes in assessed value — no matter how rapid an increase in the former — the taxes paid by the previous owner would likely be higher already, more closely matching the market value. So no bene t to the buyers there.
Last, even if there were tax advantages, they would almost certainly be short term. at’s because, in an uncapped system, the property assessment for their new home might well, in subsequent years, rise far faster than in ation, dragging their property tax bill along for the ride.
One of the great strengths of the capped system is that it gives homeowners a predictable, stable outlook on increases to their future property tax bills.
As a study into reforming the municipal tax system in HRM observed more than a decade ago, the inherent problem with property taxes is they are based on land values, not people’s ability to pay.
No amount of wistful, wishful thinking by municipalities is going to change that.
If property taxes can’t be tied more directly to the municipal services that people actually receive, then the logical alternative would be to instead look at somehow basing municipal revenues on income tax.