Municipalities to recover over $8 million in lost revenue18 November 2020
FREDERICTON (GNB) – Amendments to the Assessment Act aimed at making the property tax system more fair and providing local governments with the ability to raise additional revenue were introduced in the legislative assembly today.
“These amendments will eliminate nearly all Permanent Assessment Gap Exemptions by 2025,” said Service New Brunswick Minister Mary Wilson. “The elimination of these P-gap exemptions is about fairness for homeowners and ensuring that local governments receive the full amount of property taxes within their areas to pay for the services they provide. It is also part of our commitment to implement local government reform, which is a priority for our government.”
Currently about 102,000 home owners benefit from what is known as the Permanent Assessment Gap Exemption, which was introduced in 2013. Homeowners with this exemption are not paying property taxes on the true market value of their homes.
The exemptions were introduced for the 2013 taxation year as a way to gradually return property values to a market-value based system after a three per cent cap was put on owner-occupied residential properties due to increasing property values for the 2011 and 2012 taxation years.
Based on 2021 assessment data, the average P-gap value is $6,900 and its removal will result in an average property tax increase in the range of $100. Homeowners impacted by the change will be protected by the spike protection mechanism that limits the amount their property assessment can increase to 10 per cent per year, for taxation purposes.
“This is good news for local governments, especially for a municipality like Tracadie, which has a large number of properties impacted by the measure implemented almost 10 years ago,” said Michel Soucy, president of the Association francophone des municipalités du Nouveau-Brunswick. “Municipalities are facing new challenges which create additional financial pressures. We are ready to work with the provincial government to find solutions and create communities that are vibrant and sustainable in the long term.”
The elimination of the P-gap, once fully implemented, will result in about $8.3 million in additional funding to local governments.
“The P-gap has meant a loss of revenue for cities for many years and we are pleased to see that government is addressing this issue” said Adam Lordon, president of the Cities of New Brunswick Association. “This funding could be used by local governments to lower their tax rate. At the very least, this will provide us, leaders and decision makers, more options of how to enhance the quality of life of our residents. Strong cities and municipalities contribute to a strong province.”
A revised assessment notice will be sent in January as part of the second assessment cycle to home owners affected by the change.
“We need local government reform in New Brunswick, and property assessments should reflect actual market value,” said Alex Scholten, president of the Union of the Municipalities of New Brunswick. “The elimination of the P-gap sends is a signal that this government is committed to meaningful municipal reform and it is a first step to giving municipalities the financial tools to build our communities.”18-11-20