Self-serv­ing ar­gu­ments

The Amherst News - - OPINION - The Chron­i­cle Her­ald

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.

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