Creating A Modern Property
Tax System for Halifax
Open Houses (April-June 2008)
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Version 2
The Current Property Tax System
Must Change
• Originally designed as a wealth tax
– Property Values no strong link to income or services
– Property Tax has become less and less Equitable
– Property Tax system needs to promote Economic
Competitiveness
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A Work in Progress
• Tax Reform Committee
– Has reviewed options for a new municipal tax
system: January 2007 to March 2008
– No “off the shelf ” solution available
– Committee has proposed a “made in HRM” solution
– Mission and Principles have been developed with
public input from May 2007 Consultations
– Now a Mission, Principles, and a proposed Draft
Tax Model are put forth for discussion/debate
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Foundations and Principles
Tax Reform Mission Statement
• To provide an equitable tax system based on a charge for
services provided and ability to pay by:
• Linking taxes and fees for services to those who derive the greatest
benefit at the individual, community and regional levels, and,
• Considering ability to pay.
First Mission Statement of its kind anywhere!
Provides the logic for a new tax system.
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Principles
•
•
•
•
•
•
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Equity
Economic Competitiveness
Economic Efficiency
Respect for Other Governments
Stability
Simplicity
Transparency and
Accountability
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What does the
Proposed Tax Model provide?
• Features of the proposed Tax System:
– People would pay for the services provided
• So, people in the same neighbourhood would pay the same taxes
• Taxes charged for 9 services (including a group of regional services)
– No urban, suburban or rural tax boundaries
• Each service would have its own boundary
– Taxes are more stable and transparent
• Would not vary with market values
• Taxes would increase due to inflation (cost increases) or service
improvements
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Nine Municipal Services,
Nine Municipal Tax Rates
Individuals
Individual Charges:
1 Hydrants
2 Solid Waste
3 Local Roads
Communities
Common Tax Rates:
4 Local Recreation
5 Local Sidewalks
6 Local Transit
Zone Tax Rates:
7 Regional Roads (4 Zones)
8 Regional Transit (4 Zones)
Region
9 Regional Tax Rate:
Police
Fire
Libraries
Multi-District Facilities
Sports and Event Facilities
Recreation Programs
Support Services
Other
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Example of Nine
Municipal Tax Rates
100%
Hydrants, 5.5%
Solid Waste, 17.9%
Individual
75%
Local Roads, 17.1%
50%
25%
Local Sidewalks, 2.9%
Local Transit, 8.5%
Local Rec Facilities, 3.1%
Regional Transit, 3.5%
Regional Roads, 6.3%
Regional Tax Rate,
35.3%
Community
Regional
0%
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Shift Away from Property Tax
• Recommendation: Dwelling Unit Tax
• Considerations:
– Easier to understand and administer
– Multi-unit buildings (e.g. Apartments, Condos) are
taxed at a lower tax rate (per dwelling)
– Flat tax on residential vacant land.
– Requires stronger tax relief for low income.
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Hydrants – Individual Charge
• Dwelling Unit Tax for properties within 1,200 feet
of a working hydrant
– $116 / property
– Multi-unit buildings pay once.
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Solid Waste – Individual Charge
• Dwelling Unit Tax for those receiving pick-up
– Applies to those with pick-up (Houses, Condos and
some Rural Business)
– $256 / home
– Does not apply to those without pick-up
(Apartments, vacant land, most businesses)
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Costing of Individual Charges
• Total Costs / Total Users
• Eg Solid Waste (Collection and Facility)
$32.6m / 127,000 users
=
$256 per user
• Some homes have higher service levels and/or Cost
more to service.
• Some get weekly green bin pick-up (8 weeks in summer)
• Some get Recycling Pick-up (Blue Bag) every two weeks
• Should different rates be charged (more than one average rate)?
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Local Roads – Individual Charge
• Dwelling Unit Tax for local road network.
• Considerations:
–
–
–
–
Levied on properties bordering on a road.
$176 / property
Paid once by multi-unit buildings.
75% rate for those on private roads, provincial roads.
• $132 / property
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Local Recreation Facilities
- Common Tax Rate
• One Area Rate set for all local recreation centres
(Operating and Capital). Flat rate of $36 / home.
– Within 5-10 minute “Driving Distance” (8km) – Based on
Community Facility Master Plan.
– Only for local facilities. Multi-District (eg pools, rinks) in
Regional Tax Rate!
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Local Sidewalks
– Common Tax Rate
• Local Sidewalks. Tax on those within “walking
distance” (1km) of sidewalks:
• Houses =
$48 per house
• Apartments = $29 per Apartment (i.e. 60%)
• Commercial = 4.1 cents on assessment
• Sidewalks on arterial roads
included in Regional
Transportation Rate
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Local Transit
– Common Tax Rate
• Dwelling Unit Tax on any home within walking
distance (1 km) of a local transit stop or park and ride.
– All communities will have the same tax rate.
– $140 per house and $84 per apartment (i.e. 60%)
– Excludes MetroLink, Express Rural Transit, Ferries
(in Regional Transit Zone).
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Map of Tax Zones for
Regional Transportation Charges
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Regional Transportation Tax Rates
• Regional Road – Dwelling Unit Tax
– Pays for arterial and collector roads
• and sidewalks, lights, etc. on those roads
• Regional Transit – Dwelling Unit Tax
– Pays for Metro Link, Ferries, Bus Rapid Transit
• Four Zones: Pink, Orange, Green, Blue
– Tax rates based on Commuter trips for zone.
– Lower rate for multi-unit buildings.
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Regional Tax Rate
• Dwelling Unit Tax for services of a broad,
regional benefit
– Includes Police, Fire, Libraries, larger recreation
facilities and programming, support services.
• Could use Income Tax or Surtax (if provided
authority)
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Provincial Property Taxes
• Provincial and Other Property Taxes
– Education, Corrections, Housing, Assessment
– Area Rated based on Provincial formulas
• One-third of residential property tax
• Recommend that Provincial Property Tax
– Treated as responsibility of Province
– Remain on Assessment as per formulas
– No subsidy from municipal taxes
• including from low income rebate
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Ability to Pay
• Tax at any income level made consistent
• Increased Low Income Rebate
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–
–
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$1,000 – Reduced by 7% over $18,000
Additional $100 per child
Phases out at $33,700 (Family with one child)
Seeking administration by CRA
• Province has agreed to discuss
• No tool to tax income at progressive rates
– Support use of income tax or surtax
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Deed Transfer Tax
• No Connection to either services or income.
• Concern over economic impact
– Increases house prices
– Cannot be mortgaged
• Recommend it be phased-out
– Increase Regional Tax Rate
for residential portion
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Commercial Taxation
• Remain on market value assessment
– subject to feedback, research
• Commercial taxpayers pay on service basis
– But, no shift in share of tax revenues
– No change to historic multiplier of 2.55
• Except change in Business Occupancy, Provincial Area Rate
• Accelerate phase-out of Business Occupancy
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Where We’ve Come From
Status Quo
• Logic behind System:
– Property Tax is based on
Wealth. (Assumes value of
property is a proxy for wealth).
• Features
– Urban, Suburban, Rural
boundaries for some services.
– Low income rebates/ deferrals
– Deed Transfer Tax
Reform
• Logic behind System
– Mission Statement – Service
based system with
recognition of ability to pay.
– Supported by 7 principles and
29 objectives.
• Features
– Taxes based on level of benefit
to individual, community or
region.
– Ability to Pay mechanism
– Recognizes competitiveness
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Public Feedback Sought
• Public consultations on
– Foundations, Principles and Objectives
– The Draft Tax Model
• Feedback sought:
–
–
–
–
Accept Tax Reform Suggestions
Modify the Suggestions
Move in Another Direction
Prefer the Status Quo
• Suggest other options
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