2010 01 12 |
This blog post also appears in the January issue of Southender.
Tax reform seems destined to come to a sticky end. It represents one of the most obviously divisive things to come before HRM Council since amalgamation, because it cuts right to the heart of how this municipality is funded. Currently, residential property taxes are based on assessment, and assessment is based on market-driven property values. In theory, the more your house is worth on the market (based on size, amenities, and location), the higher your assessment and the higher your taxes. Philosophically, there is the argument that the richer you are, the more expensive house you are liable to own, and the more taxes you should pay. The opposite argument is that property taxes should be based on the share of the services you receive. The tax reform proposal moves from the former to the latter. It is a philosophical debate, so there really isn’t a right answer. There is great passion about this issue of course, because taxes are a significant cost to individuals, and any change in the tax system (which is supposed to be about shifting the burden, not actually raising more revenues) is going to see some people pay more and some people pay less.
Nowhere is the battle ground on tax reform more obvious than in the South End. South end homes tend to be on the higher end of the assessment scale, but because of the dense form of the area, and the fact that infrastructure was placed here long ago, the cost of servicing tends to be the lowest. An extreme example of where this would play out, according to a recent Coast article, is that one Young Ave. mansion would see their tax bill drop from over $28,000 to $1,300 per year. That difference in taxes collected by HRM isn’t disappearing. It would be shifted to another district, and that is why tax reform is going nowhere. There isn’t a Councillor in the world that’s going to vote in favour of taxing their constituents more, for no corresponding increase in service. And since there are only 6 of the 23 districts that currently pay more taxes than they consume in services, it’s easy to do the math.
Lost in the rhetoric is the fact that the commercial sector is the one subsidizing everyone. Commercial taxes are far higher than residential ones, and unlike some provinces where the difference is capped, in Nova Scotia the gap is getting wider and wider. If Council has no appetite for residential tax reform, they would have even less for commercial tax reform.
So, what are overtaxed residents and businesses to do? Maybe the focus need not be on what we’re paying in taxes, but rather what we’re spending those taxes on. Council is poised to approve secondary planning strategies on three new suburban developments, in areas not recommended for development in the Regional Plan. These developments are not needed to meet population demand (there is already enough approved demand to meet three times the suburban growth projections for the next 20 years). HRM staff estimate that the incremental costs of these developments would be $65 million, split between HRM and the province (all taxpayer money). This following the approval of Dartmouth Crossing residential development, which only served to eat up needed light industrial lands in Burnside, and prop up the retail competition there.
There are much wiser ways to spend that money. How about a new central library, a convention centre, new streetscaping work for the main downtown streets, bike paths, parks, and a downtown shuttle for starts? All of these projects are good investments. All of them would spur private development in the downtown core, which in turn is tax money for HRM with very little incremental servicing costs.
People are outraged by being overtaxed. I think they should be more outraged at where their money is going.