Municipal affairs minister won't touch property tax cap

Mark Furey, the municipal affairs minister, is under pressure to remove the property assessment cap.

The Union of Nova Scotia Municipalitieshas always hated the cap, ever since it was imposed in 2005. A UNSM-commissioned report released last week provides fresh ammunition.

The report was written by two eminent academics, Enid Slack of the University of Toronto and Harry Kitchen of Trent University.The facts are solid, the analysis is good, the theory is sound.They recommend the cap be lifted.

But it wont happen anytime soon, because its bad politics.

Mark Furey wants to be re-elected, and so do his Liberal colleagues.As I learned when I was a new MLA, people get mighty cranky when you mess with their property taxes. When cranky people are marking their X, they like to punish the politicians who made them cranky.

The assessment cap is, in fact, a perfect example of how politics trumps good policy.

The basic calculation of property tax is simple: its the value of your property, multiplied by the municipal tax rate.

Assessment system not perfect

The assessment system isnt perfect, because the value of a property doesnt always bear a close relationship to municipal services consumed, or to the owners ability to pay.But we stick with it becausewell, because everybody's gottenused to it.

The system works best when everybodys property values are rising at roughly the same rate.Around 2002, MLAs started hearing stories about some assessments going wild.Waterfront properties, especially, saw big jumps.There were stories like Eric Creaser of Lunenburg County, who saw his assessment climb from $82,000 to $380,000 in a single year.The property had been in his family for generations.The jump in taxes was going to make it hard to keep.

Most of the jumps werent that extreme, but the cry went up: "Do something!"And that cry acts like a political duck call to elected officials.

The answer from the John Hamm Conservatives was to impose a ceiling on the amount an assessment could rise in a single year, retroactive to 2001.At first the cap was 15 per cent, then it was lowered to 10 per cent, then for 2007 onwards it was lowered to the rate of inflation.

The cap was a political success.It stopped the worst examples of skyrocketing assessments.The hubbub died down, and politicians turned their attention to more pressing issues.

Heres the rub: The cap creates its own inequities, because it doesnt apply to everyone.It doesnt apply to new construction, or when a home is sold, or to commercial properties.

So now, after nine years of the cap, you can have similar houses on the same street paying quite different property taxes.

Political question

But the political questionwhich is different from the theoretical question addressed by Slack and Kitchenis this: Have we gotto the point where the unfairness of the cap is as bad, or worse, than the problem it was supposed to fix?

And the answer is a clear "No."

Back in 2002, it was easy to see if you were hurt by skyrocketing assessments. All you had to do was open the envelope, and compare last years assessment to this years.You knew where you stood.

Today, its really difficult to see if the cap is hurting you.You can dig up assessment information about others on your street.Most people dont know how, and arent willing to do the work if they did.

Paradoxically, some people who want to keep the cap would pay less if the cap were removed.Thats because removing the cap would allow a municipality to drop the tax rate.But thats a tough and hypothetical calculation.

Against this, theres the clean, simple idea that motivates the caps defenders: If my assessment is capped, I must be paying less, therefore I want the cap to stay.

Simple ideas are politically powerful, though often wrong.

With so many municipalities in financial straits, Mark Furey has plenty of other things to worry about.The cap issue is muted.People hurt by the cap are not mobilized. The ministers not about to buy a fight by telling tens of thousands of Nova Scotians that their property taxes are too low.

Thats why nothing will change anytime soon.