When a zero tax-rate increase costs you money
It
sounded so rosy when our city council came up with the mantra for a
zero-per-cent tax increase.
That's
when the trouble started - a vast majority of people don't understand the
process of taxes and how they are established. The end result is that a lot of
people expecting to pay the same amount on their tax bills as last year were
very disappointed, they had to dig deeper to come up with the cash.
The
problem arose in the reporting what the public understood as a tax freeze, a
zero-based change in their tax bill. What the city did, in fact, was to freeze
the tax RATE, and that's vastly different than freezing tax bills.
Taxation
is complicated because it is based on a number of variables. It all starts with
assessment, done by an independent body not answerable to local jurisdications.
Assessments are based, in part, on market trends in real estate, as of the
previous July 1. Part of that is achieved by comparing properties to similar
ones that have sold recently. You can see how subjective and volatile that can
be in today's market.
That
creates the assessment roll on which the city then determines how much money
they need for the new budget, and by setting a percentage of the total
assessment roll, that creates the tax rate on which you tax bill is
established.
So,
if the city decides to keep it's total tax collection the same as last year,
which council did, then there will not be any increase in the amount of tax
collected over all. (With minor exceptions).
That
should make everything hunky-dory, if your assessment remained the same as the
average. However, if your assessment increased more than the average, then even
with the city rate remaining the same, you have a greater starting point, thus
increased taxes. The opposite is also true, if your assessment decrease is
below the average, then you should get a tax decrease.
My
my own case, my assessment went up slightly more than the average, so I knew my
tax bill would be going up. And it did.
Clear
as mud, right? Well, there's another little thing. Sometime elected officials
move the goal posts while they're playing the taxation game – take some city
services off the tax bill and charge user fees instead. But that's another
kettle of fish. User fees are a tax by another name, plain and simple. Thus
they are taking from one pocket and putting it into another.
The
city's share of taxes is only one portion of your tax bill. The city can freeze
it's rate, but the Regional District of Nanaimo can set its own rate. There are
other jurisdications as well. But even with a tax rate freeze, the city
share of your tax bill can still go up or down.
Following
are the "Levies collected on behalf of other agencies."
The
Municipal Finance Authority.
Nanaimo
Regional District General
Nanaimo
Regional District Parks
Nanaimo
Regional District Sewer Benefitting Area
Nanaimo
Regional General Hospital District
Regional
Parks and Trails Parcel Tax
Vancouver
Island Regional Library
Then
there's the really big elephant in the room - school taxes collected on behalf
of the Province of B.C.
City
staff have tried for years to explain the relationship between assessment and
taxes and I bet only a small per cent of the public really understand.
I
would venture there are city councillors who don't understand.
Merv Unger is a retired journalist and former city councillor,
living in Nanaimo.
