A fair and effective taxation and assessment system begins with transparency and accountability.
Taxpayers need to know what services they are paying for and how much they are paying for these services. There is also a need to better understand the relationship between the costs of services and the tax rates which are set to support service delivery, as well as the provincial and local roles in setting those rates. Similarly, there is a need to better understand how market values affect property assessment and how those values translate to individual property assessments.
Apart from the mechanics of the property assessment and taxation system, there is the issue of fairness. The differential treatment of different property types throughout the province creates perceived inequities.
In addition, attention must be given to property tax payment methods and the design of property tax bills.
While New Brunswick’s property assessment and taxation system is complex, a plan will be developed to reduce these complexities and to achieve fairness and transparency over the long-term.
Current Challenges at a glance:
- The property assessment and taxation system is complicated and challenging to understand.
- The application of taxation on different property types in Local Service Districts creates perceived inequities, prevents cost-sharing and greater collaboration, and is a disincentive for community restructuring.
- The special provincial $0.63 levy in LSDs, that is intended primarily to cover the costs of policing and roads, is applied to only owner-occupied residential properties. Currently, businesses and non-owner occupied properties do not pay the $0.63 levy.
- Local property taxes apply to all property types to help finance local services. In addition to paying a local rate, non-owner occupied properties, including apartment owners, second homes, and cottages, pay a provincial property tax rate of $1.46 per $100 of assessment.
- Businesses in New Brunswick pay the provincial property tax rate of $2.19 per $100 of assessment and 1.5 times the local property tax rate.
- The current system lacks the openness and transparency taxpayers expect.
- In some areas of the province, property assessments have been increasing at an average of 5% to 6% annually for the past 10 years, resulting in a significant cumulative assessment increase over time, without corresponding decreases in local property taxation rates.
- Some property owners have experienced assessment ‘spikes’ in recent years. This can occur due to the length of time between property site inspections.
The Path Forward - Actions to achieve Objective 2
Address Property Taxation and Assessment challenges by:
- Including in the 2012-2013 Budget, a plan to reform the property tax system to make it fairer and more effective in the long-term.
- Re-designing the property tax bill to make it easier to understand.
- Introducing new property tax payment options, including monthly payments, to help alleviate the burden of a lump sum payment.
- Providing property tax relief for senior homeowners.
- Addressing assessment spikes and year-over-year (or cumulative) increases.
- Establishing a Municipal Assessment Committee to enhance the relationship between the provincial assessment function and municipal officials.
- Increasing public awareness and transparency around the property taxation and assessment system.
- A property tax system that is fairer and more effective in the long-term.
- Enhanced predictability with respect to increases to assessment values resulting in fewer surprises to property owners.
- Increased level of transparency and accountability for taxation and assessment.
- Simplified property tax bills.
- Improved property tax payment options.
- An enhanced relationship between the provincial assessment function and municipal officials.