04 AUGUST 2010
Property taxes must be fair
Published Wednesday August 4th, 2010
By Jack MacDougall
To understand this particular issue, I would like to establish my argument with some basic principles and assumptions.
First, all costs in business are passed on to the consumer at a profit margin. Therefore, if a company has an expense of say $100 and a profit margin of 20 per cent, then the customer is charged $120. While one doesn't normally deal with each item in that way, in principle, if one wants to maintain a certain profit margin then revenues must exceed expenses by that amount.
Second, in a just society everyone must have a decent and affordable place to live. It is the first step out of poverty.
Third, while it is not true in every case, people who are less affluent cannot afford their own home. They must rent apartments. Usually, they are single mothers, students, working poor and senior citizens. For a few, it is because they choose to live in apartments.
Fourth, it is completely true that apartment buildings cost much less to society than private homes. For example, if we were to take an apartment building that housed 100 units, a municipality would only have to provide one water line and one sewage line to that building. Municipalities do not have to pick up garbage at an apartment building. If we took the same 100 units and turned them into family homes, we would have to provide 100 water lines, 100 sewer lines and at least two full community blocks of land, streets, roads, lights, trees and fire protection. Their garbage is picked up at each home.
Property tax is charged based on the market value of a home or apartment building. Apartment buildings are charged twice the amount as a private family home. An apartment building valued at $100,000 pays the same property tax as a home valued at $200,000. Why.
Think about it. Apartment buildings cost significantly less to service, typically house those who cannot afford a private family home and yet are charged twice as much property tax. That is a social injustice and an obstacle out of poverty.
It is a unique New Brunswick tax grab. It does not exist in Nova Scotia, Prince Edward Island, Newfoundland or anywhere else in Canada. Only in New Brunswick. We charge apartment dwellers $75 million more in taxes than is fair. The Green Party is completely dedicated to eliminating this unfair tax.
There are other issues related to property taxes that we will address. Since property tax is based on market value, there are some unfair consequences to individuals who do own their own home. For example, a senior citizen on a fixed income receives a radical increase in their property tax bill not because their services cost more, but because the real estate market where they live has gone up in value.
In addressing these issues, I realize that taxpayers want to know if we intend to increase their taxes to offset this decrease. The answer is no. We feel property taxes are high enough.
As I write this, it is the only tax I know the Green Party promises to eliminate. This tax goes against our basic principle of social justice. We will explain ourselves in our fiscal policy as to how we intend to balance this loss of revenue. As we translate this policy into lower rents, some will be able to save enough to own their own home.
One of the sad things about this extraordinarily unjust tax is that people who live in apartment buildings think they do not pay property tax.
We make a further commitment to insuring this saving is passed on to the renter. There are several ways we can do this including rebates, lower rent than would otherwise be charged or proof of significant improvements to quality of living space. A Green government will consult all of the stakeholders of this issue to make certain we make the right choice.
Most think taxes are too high. We know and understand why we have to pay them, yet we expect the rates to have a sense of fairness and balance. When we pay property taxes we should be paying based on the cost of services to the property and the community we are living in.
Are we afraid other parties will copy this idea? In the cause of fairness, please copy this promise line for line. It would show voters small parties can make a valuable contribution to the debate.
Besides, it is the right thing to do.
Jack MacDougall is Leader of the Green Party of New Brunswick.