DON CAYO
Sun
Every time a new assessment roll comes out, there are winners and losers. That’s just how the property tax system works.
Most years, if a home or business property gains value — or, in today’s market, holds its value — more than most, then the tax bill will go up more than average.
This is tolerable because at least the winners and losers are chosen by the disinterested hand of the market. There are no favourites — just random chance. Odds are that a bad hit in any given year will even out over time.
What has changed now is that this year’s winners and losers have been decreed by Gordon Campbell and company thanks to their bizarre decision to tinker with a system that used to be applauded as one of the world’s best. This political “fix” never did address the real problem — that property taxes are becoming a real burden for too many people and firms — and it turns on its head the well-established principle of shifting tax burden onto the hottest properties.
It used to be that if you got stuck with a larger-than-average tax increase you could take solace in knowing that at least the value of your property had risen faster than most.
But this year the more your property value went up, the bigger your tax break. Because you’ll be taxed on what your property was worth a year earlier, before the increase in value that — in other years — would have driven up your tax bill.
Conversely, the less your property went up — or, gasp, if it actually lost value — the harder you’re about to be kicked in the teeth.
But just because you now have an assessment figure doesn’t mean you can predict what your tax bill is going to be. There are two reasons for this.
First, municipalities don’t set their tax rates ’ til April. Then they’ll divide the total amount of money they want by the total value of all assessments, and — with adjustments for different classes such as business and residential — this will determine the tax rate. Finally, this rate will be multiplied by your assessment, and — voila! — you get your bill.
I’m betting pretty well every bill everywhere will be higher than last year, because I can’t imagine any municipality actually deciding to spend less.
But some of our tax bills may rise even higher than spending increases dictate because of the provincial tinkering with assessments. I explained why, using examples from Vancouver, in yesterday’s column, although the precise equation will vary from municipality to municipality.
In a normal year, people can decide if they should appeal by comparing their assessment with similar properties in their neighbourhood. This year’s tinkering means this simple check is no longer enough.
So the only way to predict now if you’ll be burned when the tax bills come out in July is to compare the difference between the two assessments on your property with the average for the same class of property in your community. This information isn’t available, but I’ve asked BC Assessment to provide it for a wide range of communities, and I’ll let my readers know when I get it.
Meanwhile, several real estate contacts and property tax specialists tell me they’re girding for what could be shaping into a mass of business appeals. I find this a fascinating irony, given that this whole misguided mess apperently stems from the province’s well-intentioned but lame-brained attempt to avoid too many appeals in a market where properties are starting to lose value.
But equity — a fundamental principle that’s supposed to underlie the tax system — has been seriously undermined by this rash policy.
It’s simply not fair if, for example, Victoria’s tinkering reduced the assessments on your class of property in your community by an average of 10 per cent, but yours by only one per cent. Appeals panels can base decisions on very broad criteria, so they offer at least a faint hope that such an inequity will be set right.
To appeal, you must serve notice of intention to do so by the end of this month. If you don’t like the initial decision, which you should have by mid-March, you can take it to a higher level.
And if you don’t like the next decision? Well, as I noted in a column last November, the hurriedly cobbled-together assessment legislation gave the cabinet massive powers to intervene in order to fix gaps or correct unfairnesses. I wouldn’t hesitate to ask them — nay, to demand — that they use it.
There was never sound policy, just cynical politics, driving this change. If it were fair and it gave everyone an even “ break,” then the impact on our July tax bills would be absolutely nil. Its only appeal depends on most taxpayers not noticing how hollow a gesture it is until after the May election. And, while it may give welcome breaks to some, whatever they save is dumped onto the shoulders of others.
So have a go at your MLA or any cabinet member you can reach. They deserve it.