I believe we should have municipal tax reform but that we do not follow the Danish model of income tax as proposed by these groups – but the UK model of council “bands”.
The UK model is very close to what we have – the owner of a property in the municipality is on the hook for paying the taxes. However, instead of using a percentage of assessment with the ‘arms length’ assessment board (that no other agency uses) – the UK has fixed tax rates. So if you live in “band A” you pay 1000 pounds per year. If you live in “band H” you pay 3000 pounds per year (with gradiation in between).
These bands assume 2 adults in a house so if you live by yourself (a retired widower for example) they give a 25% discount.
This is much more fair IMO. On my street our assessed values are all different. The rate of assessement change is also different for each house over the past 5 years. So for example in 1 year I had a 4.7% increase and then a 5.6% increase in another year. In the same two years my neighbour on one side had a 5.1% and 4.9% increase and the neighbour on the otherside had a 4.3% and 4.5% increase. HOW IS THIS FAIR? Do they roll dice to come up with these increases? I have an appeal in with them as the CAP does not seem to have been applied to our property despite being in it for almost 2 years. Not surprisingly I’ve gotten no response.
We all pay different rates of tax for the same service – namely garbage/compost/recycling and perhaps snow removal (I think the province might actually be responsible for our street). Each year our contributions to municipal coffers go up, but by differing amounts. Council meanwhile has the nerve to pat themselves on the back and claim taxes haven’t risen. We have no sidewalks, no sewage and no municipal water on our street. HOW IS THIS FAIR? Why do we all pay different amounts for the same service?
Our house here is assessed at a lower value than a condo we owned in downtown Vancouver and yet despite the lower assessed value and less services we pay almost twice what we did in Vancouver in municipal taxes. It would be even worse if we were on the peninsula.
If municipal taxes were switched to fixed bands it would give council a fantastic tool to encourage development. If you live in a condo they can give lower band rates to encourage density (and reflect the fact that condos are cheap for the city to service). If they want to promote growth in particular areas they can do so with lower taxes.
If you want to have more well off people carry more of the burden for less fortunate people you can also do that with banding.
If council needs to increase operating funds (for whatever purpose) they have to be very transparent about it – no more free money each year due to assessment creep.
We would also not deincentive people to improve their homes. We’ve all seen some rather rundown places in the city – but I’m sure some people avoid improvements (or try to hide them) to avoid increasing their taxes.
We are one of the most taxed provinces in the country and we get very little in return compared to other provinces. It’s small wonder people continue to leave for other provinces. At what point will we have real leadership?
Much of your article was spot on. I attended the panel of the three unlikely amigos at St. Mary’s on Friday. It was abundantly clear that although they were on the same train they were certainly not intent on going to the same destination.
I asked them to show me or direct me to their analysis. Had they posted their spread sheets showing how the incidence of taxation would change in moving from property based to income based tax? None were able to direct me to even the most basic quantification of outcomes.
There was the suggestion that an entirely income based approach would require a 20% surcharge on the income tax presently paid. There was a good deal of back peddling and talk of “getting the conversation started”.
There seemed to be no recognition at all of the windfall gains to incumbent property owners stemming from the reduced carrying costs of property once the annual tax charge was removed. [to illustrate: a southend home with a
> $5,000 per annum tax bill would see its carrying costs drop by half if fuel/power/insurance/maintenance also cost $5,000. Given the nearly fixed supply of southend homes that should boost the home value by $100,000 – a tax free capital gain. The gains to commercial property incumbents on prime frontage like Spring Garden would be truly
spectacular].
There is a persistent view that planning to stop sprawl can have a powerful impact on municipal taxes. This needs some correction.
First on and off site infrastructure costs (including open space) can be captured by development charges or by independent utility charges.
Second most municipal services are people costs and have minimal
connection to urban form within reason – think teachers, police etc.
Third, while shifting travel from cars to buses may have socially beneficial results – it comes at a steep price in municipal taxes.
Until about 1975/80 transit operations were generally run on a break even basis [although capital investments were subsidised] It is now common for 70% or more of operating costs of enlarged systems to be covered from taxes.
Transit has moved from a marginal cost to taxpayers to being one of the ‘big four’ costs [education, police/fire, transit, and in the US social supports]
Why do per capita municipal budgets seem to relentlessly rise at 2%+ above inflation? Pressure for service expansion – the number of services that should be improved or added in an incremental fashion is myriad. High tolerance for cost inflation of large core services – especially police/fire. Pressure to move from a utility or fee for service model to a social service model – think transit.
Today there is increasing angst around tax as we have passed the point of being able to pay for ALL the spending.
Historically municipal tax came about as communities had only lands as a base to support the government spending of the day. So property owners paid tax. Later on, others began to have a say on spending. Their ‘skin in the game’ was the dreaded poll tax.
Perhaps the lesson of this apparent form of “responsible government” would be to review the ‘majority’ in terms of ‘no representation without taxation’ .
I find the comment and reasoning of John Perry most interesting and intruiging.
However it will take a momentous change in the mind set of HRM planners.
They have little or no regard to the “highest and best” use of land.It is not a consideration in their deliberations for land use policy amendments or development contracts.
They are not visionaries,but are. rather technocrats,intent on enforcing the dictated policies even if the policies are stale or outdated.They will pay lip service to the fact that we are an aging population and living accomodations need to adapt to meet that fact but when given an opportunity to do so will cave to the NIMBY argument of the neighborhood.and maintain the status quo
Thus we see little action on infilling unless it is in conformity with outdated policies.Such examples are refusal of “granny suites”, 30 or 40 foot lots and low rise condominiums.in R-1 areas.
To attempt to change the status quo is a long,expensive and generally frustrating experience.
Generally the persons who oppose such progressive changes forget that in 20 years they will welcome such accomodations as it will permit them to remain in the same neighborhood,retain the same social amenities and use facilities that they have become accustomed to ie.banks,accountants,churches,social clubs,hairdressers,lawyers and.doctors to which we develop a loyalty
However,lacking vision and direction from council,the status quo continues to persist and we are faced with the costs of expanding services to accomodate this mindset.
Increase the value (thus taxes) on “interior” land,but at the same time permit development to reflect that increased value
Great read!
Tax based on road frontage….. It brings me to the individuals who park(long term) directly in front of my house. It is common to see cars lining the streets of my Clayton Park community. I despise looking out my front door
at these cars. If we were taxed based on road frontage, I would like the ability to restrict street parking directly in front of my house by extending the green space or charging a fee to utilize it.
Cheers
A couple of weeks ago I wrote to you in regards to “U-Brew subject” and informed you that I do not make habit of commenting publicly but that subject hit a nerve, now today the HRM tax issue has forced me to vent a little more steam……
The city of Halifax should collect its own taxes within its boundaries and keep their grubby little fingers off taxes from the remainder of the provinces taxpayers, I live in rural Western N. S. and don’t get any benefits from the city and have no desire to subsidise HRM, and that includes the any convention center replacement etc. etc. etc………… HRM should be living within its own means and tax revenue, and not expect the remainder of the provinces tax payers to subsidise HRM operating.
Why couldn’t the Business Owner of the Amherst business with the condo in Halifax create a company in which his Kids going to College in the HRM are directors of a Non-Profit Society after all there was someone living in Bedford with Farmer license plates on their Jeep taking advantage of cheaper gasoline? Half of Halifax is a Non Profit Society IE the Universities , Hospitals, the Bridge Commission , City Hall , The World Trade and Convention Centre along with the arms of the Province and Federation Government located in HRM. Better yet if the Amherst Business man cant do that he could always send his children a couple of miles down the road to Mount Alison . My Father’s College. It simply amazes me the poor long suffering people of HRM whom have had 5 million dollars of Tax money from a Nova Scotia Power generating station burning relatively cleam Bunk C while a Town like Trenton was afforded nothing by the same provincial crown corporation for a similar plant burning COAL.
Let’s declutter the discussion…. basing property taxes on the cost of the services consumed (based on factors such as road frontage, location etc…) plus a factor for the overhead of providing the services…. would this not force the correlation of cash inflows with cash outflows in a well managed city??? As well as, being a much more equitable system. Fairness is something the politicans in Nova Scotia will have to start to understand regardless of how politically incorrect that sentiment is … the golden goose has flown the nest soon to be followed by the rest of the flock…. and what will be left, a cadre of politically correct academics and civil servants screaming about their increased property taxes.
Here’s another thought…not one I’m necessarily married to but it doesn’t appear to be on the table as a talking point.
A land value tax (LVT) is an economic policy tool that can be used to support the objectives of Smart Growth development. Its importance is significant to government finance directors as well as community and city planners. This tool splits the standard property tax into its two components of land values and building values. The tax rate is increased on the land part of the property and decreased on the building. The increased tax on land has a negative capitalization effect, resulting in land being priced closer to its true market value. The ability to obtain buildable infill lots at competitive prices makes this type of development more attractive to builders. The decreased tax on building improvements has a positive capitalization effect, similar to other property tax abatements. This provides an economic incentive to develop densely and compactly.
This combination of disincentives (the increased holding costs on vacant or underused lots) and incentives (diminished or eliminated taxes on buildings), supports Smart Growth goals of infill directed, compact and dense development, affordable housing, distinctive neighborhoods, and mixed use building.
Land value taxation needs proper zoning and land use controls to be truly effective. The advantages of the tax, such as its ability to promote denser development, will be diminished without proper land use planning. A land value tax has advantages over more traditional economic incentive programs such as tax increment financing and abatements. These advantages include being less targeted and broader reaching. In addition, a land value tax is not mutually exclusive to other tax programs, but can be used in combination or to complement these programs if desired.
Legally, a land value tax needs provincial enabling legislation to allow municipalities to implement LVT.
There are those however, who feel that this tax structure is not adaptable to all areas and can be damaging under certain circumstances. For planners and others involved in municipal government, the land value tax has been shown to be a successful, yet little known tool that is helpful in building Smart Growth communities.
Hi Bill,
I believe we should have municipal tax reform but that we do not follow the Danish model of income tax as proposed by these groups – but the UK model of council “bands”.
The UK model is very close to what we have – the owner of a property in the municipality is on the hook for paying the taxes. However, instead of using a percentage of assessment with the ‘arms length’ assessment board (that no other agency uses) – the UK has fixed tax rates. So if you live in “band A” you pay 1000 pounds per year. If you live in “band H” you pay 3000 pounds per year (with gradiation in between).
These bands assume 2 adults in a house so if you live by yourself (a retired widower for example) they give a 25% discount.
This is much more fair IMO. On my street our assessed values are all different. The rate of assessement change is also different for each house over the past 5 years. So for example in 1 year I had a 4.7% increase and then a 5.6% increase in another year. In the same two years my neighbour on one side had a 5.1% and 4.9% increase and the neighbour on the otherside had a 4.3% and 4.5% increase. HOW IS THIS FAIR? Do they roll dice to come up with these increases? I have an appeal in with them as the CAP does not seem to have been applied to our property despite being in it for almost 2 years. Not surprisingly I’ve gotten no response.
We all pay different rates of tax for the same service – namely garbage/compost/recycling and perhaps snow removal (I think the province might actually be responsible for our street). Each year our contributions to municipal coffers go up, but by differing amounts. Council meanwhile has the nerve to pat themselves on the back and claim taxes haven’t risen. We have no sidewalks, no sewage and no municipal water on our street. HOW IS THIS FAIR? Why do we all pay different amounts for the same service?
Our house here is assessed at a lower value than a condo we owned in downtown Vancouver and yet despite the lower assessed value and less services we pay almost twice what we did in Vancouver in municipal taxes. It would be even worse if we were on the peninsula.
If municipal taxes were switched to fixed bands it would give council a fantastic tool to encourage development. If you live in a condo they can give lower band rates to encourage density (and reflect the fact that condos are cheap for the city to service). If they want to promote growth in particular areas they can do so with lower taxes.
If you want to have more well off people carry more of the burden for less fortunate people you can also do that with banding.
If council needs to increase operating funds (for whatever purpose) they have to be very transparent about it – no more free money each year due to assessment creep.
We would also not deincentive people to improve their homes. We’ve all seen some rather rundown places in the city – but I’m sure some people avoid improvements (or try to hide them) to avoid increasing their taxes.
We are one of the most taxed provinces in the country and we get very little in return compared to other provinces. It’s small wonder people continue to leave for other provinces. At what point will we have real leadership?
George Hornmoen | May 8, 2013 |
Much of your article was spot on. I attended the panel of the three unlikely amigos at St. Mary’s on Friday. It was abundantly clear that although they were on the same train they were certainly not intent on going to the same destination.
I asked them to show me or direct me to their analysis. Had they posted their spread sheets showing how the incidence of taxation would change in moving from property based to income based tax? None were able to direct me to even the most basic quantification of outcomes.
There was the suggestion that an entirely income based approach would require a 20% surcharge on the income tax presently paid. There was a good deal of back peddling and talk of “getting the conversation started”.
There seemed to be no recognition at all of the windfall gains to incumbent property owners stemming from the reduced carrying costs of property once the annual tax charge was removed. [to illustrate: a southend home with a
> $5,000 per annum tax bill would see its carrying costs drop by half if fuel/power/insurance/maintenance also cost $5,000. Given the nearly fixed supply of southend homes that should boost the home value by $100,000 – a tax free capital gain. The gains to commercial property incumbents on prime frontage like Spring Garden would be truly
spectacular].
There is a persistent view that planning to stop sprawl can have a powerful impact on municipal taxes. This needs some correction.
First on and off site infrastructure costs (including open space) can be captured by development charges or by independent utility charges.
Second most municipal services are people costs and have minimal
connection to urban form within reason – think teachers, police etc.
Third, while shifting travel from cars to buses may have socially beneficial results – it comes at a steep price in municipal taxes.
Until about 1975/80 transit operations were generally run on a break even basis [although capital investments were subsidised] It is now common for 70% or more of operating costs of enlarged systems to be covered from taxes.
Transit has moved from a marginal cost to taxpayers to being one of the ‘big four’ costs [education, police/fire, transit, and in the US social supports]
Why do per capita municipal budgets seem to relentlessly rise at 2%+ above inflation? Pressure for service expansion – the number of services that should be improved or added in an incremental fashion is myriad. High tolerance for cost inflation of large core services – especially police/fire. Pressure to move from a utility or fee for service model to a social service model – think transit.
Michael Poulton | March 28, 2013 |
Today there is increasing angst around tax as we have passed the point of being able to pay for ALL the spending.
Historically municipal tax came about as communities had only lands as a base to support the government spending of the day. So property owners paid tax. Later on, others began to have a say on spending. Their ‘skin in the game’ was the dreaded poll tax.
Perhaps the lesson of this apparent form of “responsible government” would be to review the ‘majority’ in terms of ‘no representation without taxation’ .
gordon a.... | March 25, 2013 |
I find the comment and reasoning of John Perry most interesting and intruiging.
However it will take a momentous change in the mind set of HRM planners.
They have little or no regard to the “highest and best” use of land.It is not a consideration in their deliberations for land use policy amendments or development contracts.
They are not visionaries,but are. rather technocrats,intent on enforcing the dictated policies even if the policies are stale or outdated.They will pay lip service to the fact that we are an aging population and living accomodations need to adapt to meet that fact but when given an opportunity to do so will cave to the NIMBY argument of the neighborhood.and maintain the status quo
Thus we see little action on infilling unless it is in conformity with outdated policies.Such examples are refusal of “granny suites”, 30 or 40 foot lots and low rise condominiums.in R-1 areas.
To attempt to change the status quo is a long,expensive and generally frustrating experience.
Generally the persons who oppose such progressive changes forget that in 20 years they will welcome such accomodations as it will permit them to remain in the same neighborhood,retain the same social amenities and use facilities that they have become accustomed to ie.banks,accountants,churches,social clubs,hairdressers,lawyers and.doctors to which we develop a loyalty
However,lacking vision and direction from council,the status quo continues to persist and we are faced with the costs of expanding services to accomodate this mindset.
Increase the value (thus taxes) on “interior” land,but at the same time permit development to reflect that increased value
Bill | March 23, 2013 |
Great read!
Tax based on road frontage….. It brings me to the individuals who park(long term) directly in front of my house. It is common to see cars lining the streets of my Clayton Park community. I despise looking out my front door
at these cars. If we were taxed based on road frontage, I would like the ability to restrict street parking directly in front of my house by extending the green space or charging a fee to utilize it.
Cheers
C Robertson | March 23, 2013 |
A couple of weeks ago I wrote to you in regards to “U-Brew subject” and informed you that I do not make habit of commenting publicly but that subject hit a nerve, now today the HRM tax issue has forced me to vent a little more steam……
The city of Halifax should collect its own taxes within its boundaries and keep their grubby little fingers off taxes from the remainder of the provinces taxpayers, I live in rural Western N. S. and don’t get any benefits from the city and have no desire to subsidise HRM, and that includes the any convention center replacement etc. etc. etc………… HRM should be living within its own means and tax revenue, and not expect the remainder of the provinces tax payers to subsidise HRM operating.
Bernie Boudreau | March 23, 2013 |
Why couldn’t the Business Owner of the Amherst business with the condo in Halifax create a company in which his Kids going to College in the HRM are directors of a Non-Profit Society after all there was someone living in Bedford with Farmer license plates on their Jeep taking advantage of cheaper gasoline? Half of Halifax is a Non Profit Society IE the Universities , Hospitals, the Bridge Commission , City Hall , The World Trade and Convention Centre along with the arms of the Province and Federation Government located in HRM. Better yet if the Amherst Business man cant do that he could always send his children a couple of miles down the road to Mount Alison . My Father’s College. It simply amazes me the poor long suffering people of HRM whom have had 5 million dollars of Tax money from a Nova Scotia Power generating station burning relatively cleam Bunk C while a Town like Trenton was afforded nothing by the same provincial crown corporation for a similar plant burning COAL.
paul taylor | March 22, 2013 |
Let’s declutter the discussion…. basing property taxes on the cost of the services consumed (based on factors such as road frontage, location etc…) plus a factor for the overhead of providing the services…. would this not force the correlation of cash inflows with cash outflows in a well managed city??? As well as, being a much more equitable system. Fairness is something the politicans in Nova Scotia will have to start to understand regardless of how politically incorrect that sentiment is … the golden goose has flown the nest soon to be followed by the rest of the flock…. and what will be left, a cadre of politically correct academics and civil servants screaming about their increased property taxes.
Judy Lake | March 22, 2013 |
Here’s another thought…not one I’m necessarily married to but it doesn’t appear to be on the table as a talking point.
A land value tax (LVT) is an economic policy tool that can be used to support the objectives of Smart Growth development. Its importance is significant to government finance directors as well as community and city planners. This tool splits the standard property tax into its two components of land values and building values. The tax rate is increased on the land part of the property and decreased on the building. The increased tax on land has a negative capitalization effect, resulting in land being priced closer to its true market value. The ability to obtain buildable infill lots at competitive prices makes this type of development more attractive to builders. The decreased tax on building improvements has a positive capitalization effect, similar to other property tax abatements. This provides an economic incentive to develop densely and compactly.
This combination of disincentives (the increased holding costs on vacant or underused lots) and incentives (diminished or eliminated taxes on buildings), supports Smart Growth goals of infill directed, compact and dense development, affordable housing, distinctive neighborhoods, and mixed use building.
Land value taxation needs proper zoning and land use controls to be truly effective. The advantages of the tax, such as its ability to promote denser development, will be diminished without proper land use planning. A land value tax has advantages over more traditional economic incentive programs such as tax increment financing and abatements. These advantages include being less targeted and broader reaching. In addition, a land value tax is not mutually exclusive to other tax programs, but can be used in combination or to complement these programs if desired.
Legally, a land value tax needs provincial enabling legislation to allow municipalities to implement LVT.
There are those however, who feel that this tax structure is not adaptable to all areas and can be damaging under certain circumstances. For planners and others involved in municipal government, the land value tax has been shown to be a successful, yet little known tool that is helpful in building Smart Growth communities.
John Percy | March 22, 2013 |