All-party committee cautiously steps into property assessment cap debate

An all-party committee met Wednesday to begin considering a proposal by the Nova Scotia Federation of Municipalities to phase out a cap on annual increases to property assessments.

The cap was adopted in 2005 to prevent dramatic spikes in assessments, particularly for waterfront properties in rural areas. The current version limits assessment increases to the consumer price index.

But municipal leaders believe it is distorting the system, allowing some homeowners to save some money on property taxes while others who aren't under the cap pay more.

Neil Lovitt, a vice-president with real-estate consultant Turner Drake, agrees.

"For every person it helps validly, it is quite backwards for 10 times as many cases," said Lovitt.

The cap does not apply to apartment buildings where increases are passed on to tenants. The cap is also lifted if a home is renovated or sold, creating vastly different tax bills for similar houses on the same street.

The situation can affect seniors who want to downsize or young families buying a home for the first time. In both cases they can end up with much higher property assessments when the cap is lifted for a sale.

Phase-out sought

According to Turner Drake, the municipalities with the largest gaps between market value assessments and the capped assessments are Cape Breton Regional Municipality and Municipality of Pictou County.

The Nova Scotia Federation of Municipalities wants to phase out the cap over 13 years, but will retain a spike-protection mechanism that would prevent assessments from increasing more than 10 per cent a year.

Municipalities would also have to offer assistance to low-income residents, and as the cap is phased out they would be obligated to lower the tax rates by the same amount.

The president of the federation said the change would be "revenue neutral."

"This is all about equity and fairness in the tax system," said Pam Mood, who is also the mayor of Yarmouth. "The cap is not working."

Nervous about change

An all-party committee met Wednesday to begin discussions. The leader of the NDP, Gary Burrill, said he is cautious about any proposed changes.

"The NDP was involved in bringing about the cap in the first place," said Burrill. "The principle that no one should be taxed out of their home is one we continue to honour."

The issue also makes the leader of the Progressive Conservative Party nervous.

"I always worry about the ramifications on people, real impacts that the government hasn't thought of," said Tim Houston.

The Liberal member of the committee said it is too early to prejudge the proposal.

"This is a very complex issue that has a lot tentacles into the economy, real estate, low-income housing, rental markets, homeowners, immigration," said Keith Irving, the MLA for Kings South,

"I think we are going to have a lot of good presenters that will shed light onto the various aspects of the proposal."

The committee will hear presentations on Thursday and Monday afternoons, including from the Investment Property Owners Association, the Canadian Association of Retired Persons, the Canadian Condominium Institute and the Affordable Housing Association.