Discard Saint John’s tax myth
Deputy Mayor Stephen Chase had a great article in this weekends Telegraph-Journal on property taxes, check it out:
This week homeowners in New Brunswick were delivered their pre-Easter presents – only it wasn’t the Easter Bunny bringing colorful and tasty delights, but rather the tax man and his grim property tax bills. This certainly has made many people grumpy. Saint John Common Council decided to hold the tax rate despite a growing chorus of discontent from the citizens that their property taxes are too high, and despite the tax accountability measure issued by the provincial government, which recommended that the tax rate be dropped by about 5 cents.
Stephen Chase walks uptown with the Saint John Arts Centre in the background. Deputy Mayor Chase dismisses the idea that Saint John homeowners carry a lower tax burden than residents of municipalities where property values are higher. He says the city’s high tax rate and rising property tax assessments are putting pressure on families in a community where the average household income is relatively low.
I did not support holding the tax rate because I believe the tax rate is too high and that combined with rising property tax assessments, the tax bill is becoming unwieldy for many homeowners. One argument used to support not lowering the tax rate is that Saint John’s tax burden is the lowest in the province. The argument is meant to say that on a household basis, the tax bill is lower than elsewhere because of lower property assessment values.This is a false argument.
I offer two points that support my assertion.
While historically Saint John’s property assessments may have been low, the times are changing. Property assessments are increasing and mostly evident in newer construction. To illustrate, I will compare two similar properties in Saint John and Fredericton.
A newly built semi-detached home on Downsview Drive in Saint John is currently on the market for $188,000. It is assessed at $173,600 and has a tax bill of $3,098.
In a comparable neighbourhood in Fredericton, a newly built semi-detached on Canada Street is on the market for $189,900. It is assessed at $156,700 and has a tax bill of $2,265.
The difference in the tax bill between the two properties is $833 in favour of the Fredericton property.
The Saint John property, with only a marginal edge on property assessment of 10 per cent over the Fredericton property, pays a tax bill 27 per cent higher. Hardly a lower tax burden.
Secondly, the tax burden must be considered relative to the individual household wealth in the community. Based on the latest census data, let’s consider the income levels in Saint John:
The medium household income for all family type households in Saint John is $51,042. In Fredericton, it is $60,705. In Moncton, it is $56,292. The medium household income for married couple households is $63,053 in Saint John, $72,382 in Fredericton and $67,281 in Moncton.
This data indicates that the City of Saint John has lower household income than either Fredericton or Moncton. What this means is that even though a property may have a lower tax bill than a comparable property in Moncton or Fredericton, the lower household income wipes out any notion of a lesser tax burden. In fact, with rising property assessments and weighed down by Saint John’s high tax rate, the tax burden on Saint John households could be the greatest in the province.
The argument that Saint John can justify a high tax rate because the overall tax burden is comparably lower than other cities in New Brunswick is no longer tenable. Growth and prosperity in Saint John will require a tax rate that is competitive to other municipalities. This will attract home buyers and new construction – both of which are required for sustainability.
Stephen Chase is deputy mayor of Saint John, elected at large by voters across the city’s ward constituencies.
I agree with Stephen Chase on this issue. Saint John is eating itself from the inside out. I know many people who left the city and I am one who is looking to move out of the city and join the herd in the KV or elsewhere to stop paying crazy tax bills, particularly when the assessments keep going up by ridiculous amounts. As for the tax rates, I (of course!
have some thoughts…
First, the concept of varying tax rates by municipality is in itself a problem. NB is not a large enough province to have such a needlessly complicated system. A province-wide tax rate is in order. Yes, it would upset those who live in the local service districts and some of the smaller communities because their taxes would likely rise, but most of them use the roads in the various municipalities, they use the hospitals, they work in the municipalities, etc., so their argument can be countered quite handily.
Second, paying taxes based on assessed value is another issue that pushes people out of the city and into lesser-taxed areas. A homeowner with a 2500 square foot home valued at $150,000 uses roughly the same amount of services as a homeowner with a 2500 square foot home valued at $300,000, yet the homeowner in the lesser-valued house pays 1/2 price for those services. Imagine someone who makes $60,000/year going to McDonalds and being forced to pay $6 for a Big Mac while someone else who makes $30,000/year only pays $3. It would never be accepted, so why should we accept it with our taxes? A better system might be to assess taxes based on square footage rather than assessed value.
Finally, there should be a percentage cap in place for those who retain their primary residence (similar to the state of Florida). For example, a little old lady who has lived in the South End for 30 years in the same home is forced to come up with more and more tax money each year, likely while facing a fixed income problem, for no new services (some would argue she receives less services each year…). And as long as she lives in that home, she sees no real benefit for the increased “assessed value” of her home.
[...] Peterson started this discussion with a re-print of a Telegraph Journal article by Stephen Chase. The article was fuelled by what Mr Chase refers to [...]
Thanks for posting this Shawn and starting this discussion.
I’m from the West Coast- starter homes start at 400k where I am from. And I worked for a municipality a few years ago- was even the one who administered the property tax program so I know how its calculated out there. Ive seen tax bills out there- dollar for assessment dollar, we pay way more here and get considerably less services.
However, assessment values are really silly to compare- its the expenditures of the municipalities that should be compared. Sum up the assessment values times the ‘mill’ rates for each category and you get the budget figures for the municipality. When I worked a municipality, we prepared our yearly budget then reviewed and revised our mill rates (as there are more than one dependent on the type of building) every fiscal year after the assessment roll came out but before tax notices were prepared.
When the City of Saint John refused to adjust the mill rate that means they they got a huge increase in their budget. Where is the extra money being spent? maybe this means they will plow in front of my house next winter though I doubt it.
Clearly they are spending more here- I know there are some fixed costs that would lift the cost that each person here has to pay but I would expect that huge of an increase to warrant the increase we got this year. My tax bill went up almost 15% from last year. Everyone I spoke to had another large increase. There are low incomes here. There are jobs that get paid 20k here that make 50k elsewhere in the country. There is a myth that the cost of living in NB is lower- its not. A lot of the big companies here appear price gauge. Our vehicle costs are higher as the vehicles get damaged due to the poor state of repair in the roads. Even food is more expensive here which I can’t understand as it totally contradicts the laws of supply and demand- the cost of getting the food to NB should be lower since everything is closer. The City seems to be unresponsive and unconcerned- almost a self-entitlement opinion that they can do whatever they want. And that attitude is mirrored in some of the big companies.
There are lots of good things about living in NB- I don’t mean to sound negative. NB is a wonderfully laid back place to live- Saint John in particular offers a lot to any person who lives here. That’s why I chose to live here over anywhere else in the country. But NB lets the Municipalities and the big companies get away with too much. I haven’t been here long enough to know why but I think these large organizations are taking advantage of the good nature of the people they serve. I think we need more socially conscious businesses and culture in Saint John and in NB. I think we as a community need to aim higher.
The issue of Assessments is an interesting one and I agree with Teri. The cities and towns are gouging us in taxes, not the Assessors in their values. I work in real estate and see the increasing market values of homes and property in general. It has nothing to do with inflation, cost of living indexes, or anything like that at all. Some housing markets go up 5 to 10% in one summer, not alone one year.
Does anyone really believe the value of thier property has been going down recently? The provincial appraisers are dealing with thousands of houses to value and rarely does someone look at their assessed value when they are selling and say “I’ll take that”, no…they typically want more…and real estate agents are always keen to get every dollar for thier clients because it means more for them.
Well here is an idea folks. Lets cap assessments by capping what you can sell your property for. Inact a law called “market value be damned” and nobody is allowed to sell their house for more than the current tax assessment value. That will effectively freeze your value and provide affordable real estate for everyone, it will never increase. Only problem, your most valuable asset won’t appreciate at 5 or 10% a year either.
I wonder my assessment value goes up? Duh!
quit bein maritime arsehole’s an move to alberta were life is better…………