“Property tax system 'inconsistent'” plus 2 more

Property tax system 'inconsistent'
Eliminating business property tax could hurt counties, committee says
Tax rolls confirm revenue reduction

Posted: 06 Aug 2010 02:18 AM PDT

By STEPHEN LLEWELLYN
llewellyn.stephen@dailygleaner.com

The New Brunswick Real Estate Association is calling on the provincial government to take fresh action to curb skyrocketing property tax assessments in Fredericton and across the province.

The association, which issued a discussion paper Thursday, also said the Liberal government's property tax adjustment mechanism introduced last year to try to fix the problem is a failure.

"The property tax system, in its present form, is unpredictable, complicated, unclear and inconsistent across the province," said Jason Stephen, chairman of the association's government relations committee.

"If changes are not made soon, the economic prosperity and growth of the province may be at risk."

The New Brunswick Real Estate Association said that in the past six years governments have increased their tax base by $15.6 billion on the backs of property owners.

"We strongly believe that, for an issue directly affecting the quality of life of New Brunswickers, property taxation must now become a government priority," said Stephen.

"It is the No. 1 concern of people looking to purchase a house."

He said it makes it harder to buy a home, adding more than 8,700 property tax assessment appeals were filed in 2010.

"Some people own properties that haven't seen an increase in assessment or taxes whatsoever where others receive assessments that have skyrocketed by hundreds of percentage points," said Stephen.

"This imbalance is unfair and it must be addressed."

The association made four recommendations for changes to the property tax assessment system: simplify the property value assessment calculations, make the system easier to understand, address the urgent issues for fixed- and low-income residents and eliminate double taxation on non-owner occupied properties.

Stephen said the system should base property tax assessments on real market values in a wider area rather than new construction or multiple offers on a hot property in specific neighbourhoods that can cause assessments to spike.

"The tax bill is not an offer to purchase," he said.

But he said the association isn't advocating a cap on assessments or tax deferrals, which have their own problems.

Regarding the double-taxation issue, Stephen said it should be phased out over three to five years.

"We know it is not going to happen overnight.''

He said the association's recommendations wouldn't be difficult to implement.

As for the government's new accountability mechanism, he said it's not working because it doesn't provide transparency, property taxes aren't dependent on real property values, it doesn't account for major annual variations in the value of property or the amount of new construction and it relies on new construction for a major portion of annual increases in municipal revenues.

It also puts property owners in the middle of a jurisdictional battle between the provincial government, municipalities and local service districts, he said.

"They will admit themselves that it didn't really take off," said Stephen. "To give them credit, they took a stab at it and they tried."

He said the association is saying don't give up just because one attempt to fix the system failed.

"The time has come to fix what's broken in this province. Whoever forms government after this election will be absolutely required to take a leadership role in solving this growing problem."

The discussion paper can be read at the association's website at www.nbrea.ca.

Trevor Holder, Tory MLA for Saint John Portland, said the province's property tax assessment system is antiquated and needs to be modernized and the Liberal government hasn't done that.

"This is an issue that will be addressed in the (Tory election) platform," said Holder on Thursday. "All these issues will be addressed."

The Opposition has advocated a short-term, three per cent cap on property tax assessments until the system can be revamped, he said.

Finance Minister Greg Byrne said the government will announce changes to the property tax system in a few weeks.

"We recognize this is an important issue," he said Thursday.

"We are going to address the issue of a fair and equitable tax burden."

Byrne said the system is complex, has many vested stakeholders and the government has made improvements.

That includes making the price of house sales available to the public, which makes comparative data available for assessment appeals, he said.

There's also additional printed material on assessment available through Service New Brunswick and the assessment appeal system has been streamlined, said Byrne.

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Eliminating business property tax could hurt counties, committee says

Posted: 06 Aug 2010 04:39 AM PDT

August 6, 2010 · A special tax committee is trying to determine whether the benefits of eliminating business personal property taxes outweigh the negatives.

For the past few years, state lawmakers have talked about exempting West Virginia's businesses from the personal property tax. Gov. Manchin proposed the measure during the last legislative session but it would have to be approved by a constitutional amendment and no one was sure whether it had enough popular support.

The West Virginia Tax Modernization Project discussed the issue at length during their meeting yesterday.

Proponents of the measure say it would improve West Virginia's business climate; neighboring Ohio lets commercial and industrial businesses exempt their machinery.

Committee member Cal Kent, whose day job is as Vice President of Business and Economic Research at Marshall University, says eliminating that tax would leave a huge funding gap for counties.

"By and large, you've got a huge local gap that right now, there is no authority at the local level to make it up," Kent said.

"It would be very difficult in many of the counties, even if they did have the authority, to offset the $10, $15 million losses that they would experience. So the whole question that you have to answer is where and how is the state going to keep the counties whole when they lose a significant source of their revenue."

Personal property tax is one of the few that goes directly to the counties. Kent estimates that in total West Virginia's 55 counties will lose about $250 million if the tax exemption is passed.

The West Virginia Center on Budget and Policy released a draft report on the effects of exempting the business personal property tax. Executive Director Ted Boettner says the measure is a costly and ineffective way of increasing job growth.

"The scholarly consensus is that state and local business tax cuts are ineffective at increasing employment growth and economic development," he said.

"Businesses look at an array of things, and especially they look at the labor force, quality of living, transportation costs and these things. It would probably do little to attract new manufacturing, especially in a slumping economy."

The committee didn't take action on the issue, but decided to study it some more.

They also discussed ways to streamline West Virginia's senior tax credit. Right now, there are four different tax credits that seniors are eligible for, but most of them take the Homestead Exemption tax.

Deputy Secretary for the Department of Revenue Mark Muchow says the options are confusing, and that sometimes seniors don't choose the credit that's best for them. His subcommittee recommended the credits be reduced to one option.

"But the single option would be expanded," Muchow said. "Those who qualify for the refundable tax credit under the homestead exemption provision on the first $20,000 of taxable valuation would continue to receive that benefit.

"In addition, if after that benefit has been applied, the net tax that's left over is still in excess of four percent of their gross income, they would also take advantage of the excess circuit breaker tax credit which is a refund of tax in excess of four percent of gross income up to $1,000."

The Tax Modernization Project will send its recommendations to the governor, who will decide whether to ask the Legislature to take action on the issue during their regular session.

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Tax rolls confirm revenue reduction

Posted: 05 Aug 2010 10:47 PM PDT

Certified property tax rolls were released on Thursday, with The Colony officially bringing in $2.1 billion. Though there was new construction in town last year with a taxable value of approximately $53 million, existing values decreased by about $105 million, resulting in a net reduction of $51.9 million, Finance Director Rebecca Lai said./File photo

The final numbers are in, and the city of The Colony is facing a 2.4-percent reduction in property tax revenue for the next fiscal year.

The certified tax rolls were released on Thursday, with The Colony officially bringing in $2.1 billion in property taxes. Though there was new construction in town last year with a taxable value of approximately $53 million, existing values decreased by about $105 million, resulting in a net reduction of $51.9 million, Finance Director Rebecca Lai said.

Despite the dip, no one is pushing the panic button at City Hall. Lai said the city has been planning ahead for months in anticipation of a decline in tax revenue.

�We have been working to reduce the budget so as to bring everything to a balanced budget,� Lai said. Reductions have included the elimination of 14 staff positions as well as line-items within city departments.

Lai said no more personnel layoffs are planned, and because the cuts are coming from within city departments, residents should not notice a difference in terms of services.

�The little bits that we have to change are coming out of departments� line-items without affecting personnel or services. We are trying to maintain the same level of services. It�s difficult but we are working on it,� she said. �No program has been cut.�

Once approved by the city council, the budget will be officially adopted on Sept. 21. A public hearing on the budget is scheduled for 7 p.m. Aug. 17 at City Hall, at which residents are encouraged to attend and share their opinions on the financial direction of the city.

City staff members will make a formal presentation of the proposed budget, which includes a .25-cent reduction to the tax rate, at the next city council meeting, scheduled for 7 p.m. Monday.

A public hearing specifically related to the tax rate is scheduled for 7 p.m. Sept. 7. Once finalized, the budget will take effect at the start of the next fiscal year, Oct. 1.

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Property Tax

Friday, August 6, 2010