Property tax rates being applied to homes in Moncton number in the thousands
Identical assessments among houses mean little when it comes to tax bills
New Brunswick property tax data that shows homeowners in Moncton are being billed at what are effectively more than 3,000 different property tax rates this year is probably a Canadian first, and not in a good way, according to one municipal expert.
Aaron Moore, who teaches urban politics at the University of Winnipeg, said he has never heard of houses in a city being taxed by so many different amounts and it undermines the equal treatment of residents in what should be a fair and simple tax system.
"I was not aware of any other example like that," Moore said after being shown the thousands of different rates being paid in Moncton by homeowners.
"It is just a bad system."
Moncton has only one tax rate for owner-occupied homes in its urban core. It is set at $1,361.40 per $100,000 of a property's assessed value.
However, a provincial government property-tax rule, called "spike-protection," limits how much of a home's value can be taxed in some cases.
Relief from spike-protection depends on how quickly a home's value has appreciated in recent years and how long an owner has lived there.
Those two conditions, combined with an explosion in the price of homes in Moncton over the last five years, have worked to distort who is required to pay what to finance municipal services.
On Janick Court in Moncton's northeast corner, a duplex with similar halves that shared identical property tax bills five years ago, now has one side being billed $1,308 more than the other.
Around the corner on O'Neil Street, what had been a $39 property tax difference on two halves of a duplex two years ago has ballooned to a $1,035 difference this year.
In each case, the change is caused by property-tax bills being spike-protected for homeowners on one side of the duplex and not the other.
Houses with new buyers lose their spike-protection discount and new owners are required to pay full taxes.
In Moncton, this has opened up large gaps between neighbours in what they are being made to pay in tax to the city.
Moore said the policy undermines equal treatment of taxpayers and probably acts as a financial barrier to young people hoping to be able to afford their own homes.
"You're punishing people who are newly entering into the housing market," Moore said.
"They're younger and they tend to have less money and they tend to have large mortgages."
A jumble of tax rates can be seen in other New Brunswick municipalities as well, but assessment increases have been the most extreme in Moncton, so the gap between what new and regular homeowners pay is widest there, and the percentage of houses involved the highest.
Although new homebuyers all pay Moncton's full tax rate of $1,361.40 per $100,000 of a property's assessed value, tax data for the city shows longtime homeowners can pay rates, after their spike-protection discount, that effectively are as much as 37 per cent lower.
Rounded to the penny, the different tax rates applied to individual houses in the city after discounts now number in the thousands.
On Moncton's Golden Street, one new homeowner was sent a tax bill this year (plus a small provincial administration fee) for $4,596.68 based on the assessed value of their house at $332,900.
Eleven other houses in Moncton had the identical assessment, but all were billed different amounts. Discounts ranged from $307 to $1,370.
It is now common in Moncton for new homeowners to be billed for more taxes than neighbours who live in more expensive homes.
The New Brunswick government has defended its special treatment of existing homeowners over new buyers, and for next year has announced a provincewide assessment freeze that will also exclude those who buy a property this year.
Zachary Taylor, who teaches urban politics at Western University, said homeowners are a powerful political group and keeping them happy often leads governments into making short sighted policy decisions.
"People get mad when their property taxes go up, and so politicians want to avoid that," Taylor said.
"In an ideal world, you would have regular reassessments, and all similar properties would be taxed at the same rate."
In other jurisdictions, Taylor said, freezing an unpopular property-tax system for a period of time rarely works well and only makes it more difficult to fix later on. In New Brunswick's case, he said, a freeze will likely "widen" the gap in the tax burden in Moncton between new and old homeowners that will have to be fixed at some point.
"The longer you freeze things the bigger the jolt will be when you unfreeze."
ABOUT THE AUTHOR
