When Premier Robert Ghiz came to power in 2007, he vowed to bring fairness to the property tax system.
For years, governments of both political stripes claimed righteous indignation when their political opponents suggested they had increased the property tax rate. They claimed, quite rightly, the rate had never moved. There was a simple answer why-- it didn’t have to. The reason, of course, was the assessed value. of most Island properties rises over time-- in some years the increase could be steeper than others.
If the tax assessors decided your property was worth five per cent more than it was last year, then your tax bill was up five per cent. The government of the day usually proclaimed it as a cost of progress. The reasoning went something like this.. Economic growth is leading to an increase in the value of properties. The government usually threw in for good measure the fact the value the tax assessor put on your property was probably less than you would be willing to sell it for.
That overlooked the fact that , even if the economy is improving, that doesn’t necessarily translate into a salary increase for the homeowner. It is hard to plan for a large increase, especially if the pay cheque is the same as last year. In today’s economy, there is a strong possibility it could be less. The Robert Ghiz government put a freeze on assessment increases shortly after it came to power until it could figure out how to change the system. That freeze will end when this year’s tax bills show up in the mailbox. Now, increases in any given year will be tied to the Consumer Price Index. Calculated by Statistics Canada, the index measures changes in eight categories of consumer spending-- food, shelter, household operations, clothing, transportation, health and personal care, recreation and alcohol and tobacco purchases.
That index increased 1.9 per cent last year and so will our tax bills.
While nobody likes a tax increase, at least this does have a rational basis. However, it provides no guarantee against double digit tax bills in the future. Keep in the mind 2010 wasn’t exactly a banner year economically and yet the index grew almost two per cent. What would happen in a strong economy?
Just like the old system, the best we can hope for in terms of an increase is zero-- if the economy slows down and the index drops, the assessments simply stay the same. It’s certainly a better bet than playing the lottery that your tax bill will probably keep going up each year. The biggest difference will be the government has a new explanation to offer when people ask why.