Tax Diversity – part 2

I talked about how to make sure we have some fairness across the region in my last post. This discussion is all driven by the recent “tax reform” debate. Really, the failed and arguably unfair HRM Tax Reform proposal was not conceived strictly to enrich the wealthy, though it clearly would do so. The debate is a sign of a system under stress.

The speed of change in property values in the region has accelerated, during the same decade in which the Savage government rationalized (or downloaded) municipal spending.

Even if property values had not budged, taxes in the county and Bedford were going to go up because of municipal reform, which imposed one set of rules on all municipalities, instead of each town and county and city having its very own custom deal (67 of them, in fact).

Then you have property values. I remember in the 1980s, a house in Dartmouth my parents was bought for $128,000, and sold for $128,000 and ten years later, well, it sold again, for $138,000. A smaller house in North York in Toronto cost $450,000 when we moved there. Growing up, property here was worth less here than elsewhere, and did not appreciate rapidly.

The economy has changed, especially in Halifax, where housing prices rose in a bubble that has yet to burst, or, alternately, finally represent their real value for a major urban centre in Canada. Probably property is a bit over priced here, but the strain comes where your taxes are based on property value, and the property value doubles and triples every 10-15 years.

Tim Bousquet at the Coast wrote a great article about tax so called reform, linked here. There is a difference between income and wealth, and there are mechanisms to ensure the window is not driven from her home. It debunks a couple of tax myths.

That being said, I don’t think an all property tax system is fair. I don’t think a user pay system is fair. The reason we have taxes in several areas provincially and federally is because it is fairer to distribute the cost. I don’t see why we need to go “all in” on just one system.

Property tax works to ensure that wealth is taxed. Is it taxed fairly? There are many arguments for and against this key point. I don’t pay the same taxes my cousins do in Toronto, not by a long shot, and I get comparable services in Halifax for less money.

Commercial taxes are high, but are they higher than other cities? The property taxes are established because Medjek, Starfish and Armour keep spending the money to buy those properties, so the value of the buildings is fairly established.

I also don’t buy the whole argument that it costs more to police rural and suburbia than urban, because of population density and lot size. This is true, but you need a lot more cops in the core, because crime statistics clearly show that there is more crime in the dense core than the empty farmland. I think on the whole it balances out.

This being said, we now have to turn to what is unfair – taxing property for education, a provincial tax. So is having one tax, instead of a mix of taxes. Larry Haiven and his group are promoting an income tax. Income tax is the fairest of taxes, if moderately applied. We have also been pushing for a percentage point or two of sales tax going to the municipalities. Should different taxes be tied to different services? Maybe, but isn’t that why we elect a council, to make decisions?

Finally a fee for new lots needs to be established that reflects the full cost of adding a new residence. Tim’s article says Burlington, ON charges $29,000 or so for servicing. This would slow down sprawl, and help pay for it when it does happen.

I think a reduction in property tax, with income tax, sales tax, and more power for area rates and more responsibility for local improvement to community councils would all contribute to increasing the fairness of the tax system.