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LETTER TO THE EDITOR: Thoughts on the Capped Assessment Program, changes needed


SHELBURNE  – The Warden of the Municipality of the District of Shelburne, in the Summer 2016 newsletter, says:  “There are now less benefits to residents from (the Capped Assessment CAP) program . . . it is no longer working in a fair manner.”

He is absolutely correct as demonstrated by his example of two identical neighboring properties in which one pays substantially more than the other. The provincial government must change this tax program. 

The current capped property assessment program creates a regressive tax: a bigger tax burden on the less well off than on the better off. It has evolved and expanded so that it no longer meets its original aim of protecting property owners from an inability to pay taxes on extraordinary and inflationary rises in property values. 

Tax reform is a complex and emotional issue that governments are fearful of addressing. All political parties must recognize the need for change. It is not a party political issue. Municipal and property tax reform is a cross party, public issue that desperately needs provincial government attention. 

Past provincial governments have refused to act on reform on the basis that the capped property assessment is popular. Because it is popular does not make it right. 

First and superficial impressions of the CAP are that a tax break is being received. A tax break is received but the value of property being excused of taxes is much larger for the well off higher value properties. This means the less well off on smaller value properties get much smaller tax relief and bear the burden of municipal taxes. Tax revenues have to come from the taxable property values and the well off have a larger value of property assessment excused of taxes. They are able to pay.  The well off should not be excused property taxes when the CAP was meant for fixed income earners whose property values increased through no fault of their own and are no longer able to pay. 

The capped property tax should not protect those who buy or build property beyond their ability to pay property taxes. There is a need to protect long-term property owners who for years have been able to pay their taxes but who become unable to pay because of fixed or limited incomes and exceptional rises in property tax assessment and thus property tax. This original aim of the capped property tax assessment program has been lost and is now harmful, pernicious, regressive and unfair.  It must be reformed to return to its original intent.

Some property owners have become land rich and money poor. As property values went up so did the taxes to the detriment of long-term property owners on fixed or low incomes. Expansion of those eligible for CAP exacerbated the problems by creating more anomalies (such as old and new homeowners of like properties paying vastly different levels of tax for the same services).  The current system does not meet the original aim. 

Past provincial governments have also refused action with the excuse that changes to the property tax system are attempts at a tax grab on the part of municipalities.  The desired alternative must be revenue neutral from the current CAP system for municipal governments.  This can be designed into a new program and even legislated. 

Change will take hard work and dedication. That is another reason governments don’t want to consider it.  The current system is so regressive, unfair and problem ridden that the hard work must be done before the situation deteriorates further. 

There are three aspects to this hard work of change to the property tax system.  They are: 

A) acceptance of the problem and the need for change;

B) defining the alternative, and;

C) transitioning from the current situation to the desired alternative. 

Let’s at least acknowledge there is a problem and the CAP needs to change.  The public should be demanding reform. Any provincial government should desire a fairer property tax system.

It’s broke. Fix it. 

 

Sherm Embree

East Sable River

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