Tristan Cleveland: Here's why most people are getting screwed over property tax
Wealthy residents get a break while the financial burden shifts to others - 57 per cent of Haligonians are paying on average $275 too much.
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According to a new analysis by Turner Drake, 57 per cent of residents in Halifax are getting screwed to give a tax cut to the wealthiest, to the tune of $27 million a year.
The problem is called the “assessment cap,” and it is hurting rural residents, young people, immigrants, and the poor.
Like nuking a pothole, the assessment cap was brought in to fix one problem and created a bigger one. Some rural homes were having their property taxes jump when rich people bought homes nearby for exorbitant prices, pushing up assessments.
Instead of fixing that specific issue, the government decided, in 2005, to just freeze the assessment for all current homeowners. That might sound great, but any taxes these homeowners are not paying must be paid instead by new homeowners. It is as if we want to discourage young people and immigrants from moving here.
The people who benefit most from the cap tend to live in the highest-income communities, because these are the places where assessments would have otherwise gone up. The cap saves one lucky mansion on Young Avenue, for example, a whopping $7,900 a year.
Looking at the maps, you can hear a sucking sound as money moves from the whole region to give a tax break to our few wealthiest neighbourhoods. On average, the top one per cent of beneficiaries are avoiding $1,500 in taxes a year.
Turner Drake’s analysis, released Thursday, reveals a perverse reality. Many who have the cap may think they are benefiting from it, but aren’t.
Here’s the thing: the cap doesn’t help someone if their assessment wouldn’t have changed much anyways. But since so many wealthy people are getting a tax break, the percentage people have to pay on their assessment is higher than it would be otherwise.
As a result, 57 percent of Halifax residents pay too much, and by $275 a year, on average. Surely we can change a policy that hurts the majority of us.
The disparity is true even inside communities. In Fairview, the wealthiest parts of the neighbourhood keep saving more each year, while the poorer blocks are increasingly paying more than their fair share.
Ironically, the cap hurts many rural areas, the places it was supposed to help. In Sheet Harbour, a nursing home is paying $5,000 more than it would without the cap.
Bizarrely, the assessment cap does not apply to apartment buildings. Nothing costs the city less to service than apartments, and yet they are being asked to disproportionately pay for this tax-break for the rich.
That means many youth, poor people, and new Canadians are getting screwed twice: they pay extra when they rent an apartment and again if they ever buy a home.
And every year, these distortions get worse. The question is, should we end the cap now that we are charging youth, immigrants, poor people, and rural communities $27 million too much a year? Or does it have to get to $50 million? Or $100 million? Eventually, this has to end.
The people the cap was supposed to help, it’s not helping. Many who think they are being helped, it’s not helping. The people who are benefiting from it don’t need it. The people who do need help, it’s hurting.
It’s time to #scrapthecap.