No easy answer to a taxing problem
By Ivan Morgan \ May 5, 2023
Sometimes the best laughs come from the strangest places.
Years ago, I sat in on a Municipalities Newfoundland and Labrador (MNL) public session during their annual general meeting. I used to love attending the MNL AGMs – hanging out with mayors and counsellors and other municipal peeps for a few days talking municipal trash. Always a time!
The late afternoon session was hosted by the provincial government’s Municipal Assessment Agency. They’re the folks who decide what your property is worth for taxation purposes. If you are having trouble sleeping, head over to their website and read what they do. If that doesn’t knock you out, see your doctor.
There were a few hundred delegates sitting in a room listening to the CEO talk about what his agency does. My job was to take notes. I wrote “snorefest.” At the end of a mercifully short session, he opened the floor to questions.
A fellow walked up to the microphone at the front of the room. I knew the guy. He was the volunteer mayor of a tiny town in Central. Good guy. He looked like the retiree he was. Jeans, windbreaker, plaid shirt, work boots, grey hair.
“I have a question about property tax,” he stated.
The well-dressed CEO on the stage nodded and said to go ahead.
“So,” he started, “If I sink $300,000 into my house and property, do it up real nice and fancy, pretty as a picture and a credit to the community, my property taxes are going to go up. Isn’t that right?”
The CEO agreed that was probably the case.
“And if I am a complete dirtbag, never spend a cent on my property and cover it in gravel, car wrecks and broken beer bottles, my taxes won’t increase. Could even decrease. Right?”
The CEO thought for a moment and then cautiously agreed.
The mayor threw his hands in the air and exclaimed “How is that fair?!”
The place, as they say, went up.
He hit the nail on the head regarding the problem with property tax. It isn’t fair. Yet most municipalities charge it and most of us pay it.
It’s known as a regressive tax; it’s expensive to administer, puts a heavier burden on people with low incomes, especially retired folks, and is divisive, creating classes of property owners –residential, commercial, and industrial. Not to beat a point to death, but it’s based on the value of the property, not the owner’s ability to pay.
The trick is there doesn’t seem to be much appetite for change. Over the years I have written notes on this issue for various elected officials, as well as written a few stories on bad old property tax for newspapers. Nothing. No one took the bait. Even my friend the mayor got nowhere. When the laughter died down, the Agency CEO (who, to his credit, also laughed heartily) agreed with him. But, he asked those assembled, what to do?
There is a great line from a study done on property tax from a decade ago: “No one is happy with property tax.”
Except, I would argue, we all are because while there’s lots wrong with it, we stick with it. Solutions or alternatives are complicated and boring and seem unlikely to work.
Want another funny? I was present in a room with a bunch of mayors and counsellors when a provincial government person suggested municipal tax could be paid as a percentage of your income tax, with government remitting it back to your municipality. That person was laughed out of the room.
The provincial government won’t be helping. Last I checked they don’t even pay municipal taxes in the places where they have property. How’s that for leadership. Want to light up a council? Just ask them how much lost revenue that is.
I did a little research on this issue, to bone up on what’s happening. I looked at a PhD paper on property tax in Canada done two years ago from someone at the University of Toronto. He has concluded the jury is still out on whether property tax is a good thing. More research, he writes, is needed.
I hope he calls any municipal counsellor trying to keep the lights on in their cash-strapped community.
Ivan Morgan can be reached at firstname.lastname@example.org