UNFAIR PROPERTY TAX SYSTEM

 

Property Tax Is a Blunt Instrument — It’s Time for an Overhaul

VOICE OF NANAIMO – Editorial

By Jim Taylor – Independent Public Advocate

 

Every year, the same ritual plays out.

City hall decides how much money it wants to spend. It backs into a total tax requirement, sets a mill rate, and then simply divides that bill across all properties based on their assessed value. Your assessment goes up, your “share” goes up. End of story.

We’re told this is “fair,” because people with more valuable homes should pay a larger share of the cost of local government. But look at how the system actually works on the ground, especially in today’s economy, and the logic starts to fall apart.

When ‘fair’ suddenly costs hundreds more

If what you were charged last year was considered your fair share based on the value of your property — with zero regard for your income or your actual cash flow — how does it suddenly become fair to demand hundreds or thousands more this year just because BC Assessment says your house is worth more on paper?

Nothing changed about your income.

Nothing changed about the garbage pickup at the curb, or the number of police cars that drive past your street.

The only thing that changed is a number on a notice.

If last year’s tax bill was fair, this year’s jump isn’t. And if this year is somehow “fair,” then last year wasn’t. City hall can’t have it both ways.

A “fairness” test that ignores ability to pay

Property tax in British Columbia is a blunt instrument because it completely ignores ability to pay. The assumption baked into the system is that a higher assessment equals more wealth, and more wealth equals more capacity to pay.

That may be true for a small slice of speculators and high-income households. But for a huge portion of ordinary homeowners — seniors on fixed incomes, working families keeping up with mortgage payments and groceries, single parents hanging on by their fingernails — rising assessments are not a sign of real wealth. They’re just a trigger for higher taxes.

You can’t buy groceries with “equity.” You can’t pay your hydro bill with a notional gain in property value that only becomes real if you sell your home — and often leave your community.

We’ve created a system where people can be “house rich and cash poor,” and government keeps pushing harder on the “rich” side while ignoring the “poor” reality of daily life.

City hall starts with what it wants, not what people can afford

Another problem is the sequence of decisions. City hall doesn’t start its budget process by asking, “What can our community actually afford this year?” It starts by asking, “What do we want to spend this year?” Only after that does the machinery crank out a mill rate to make the numbers work.

That’s exactly backwards.

In a time of rising food costs, high interest rates, and growing debt loads, the question of taxpayer capacity should be front and centre. Instead, the property tax system lets councils behave as though the community is a bottomless well of revenue, as long as property values keep climbing.

A crude tool in a modern economy

Property tax might be old, but that doesn’t make it sacred. It’s a 19th-century tool being used on 21st-century problems. It doesn’t distinguish between:

·       A retired widow living on a modest pension in a house she bought 40 years ago, now suddenly “worth” a fortune on paper; and

·       A high-income professional couple who bought recently at top dollar and have plenty of income to absorb a tax bump.

To the system, those two households can look almost identical — and get treated that way — because all it sees is property value.

If we were designing a tax system from scratch today, with the realities we know now, would we really choose this model as our main way of funding essential local services? Or would we at least build in safeguards so people aren’t taxed out of their homes by assessment jumps they never asked for and can’t control?

Time for an honest conversation and real reform

None of this is an argument for “no taxes.” Roads, fire protection, policing, parks, and basic city services all cost money, and somebody has to pay for them.

But a system that starts with what governments want to spend and then leans on inflated property values to extract the cash is not sustainable and not fair. It is, at best, a crude proxy for ability to pay — and at worst, a slow-motion eviction notice for people on fixed or modest incomes.

An honest conversation about reform would include:

·       Recognizing ability to pay as a key principle, not an afterthought;

·       Stabilizing taxes for long-term, fixed-income owners facing big assessment spikes;

·       Forcing councils to squarely address affordability before they rubber-stamp new spending.

Until that happens, we’re stuck with a blunt instrument that keeps hitting the same people hardest — not because they’re truly wealthy, but because a number on a property assessment keeps going up.

It’s time to admit it: the current property tax model in B.C. isn’t just outdated. It’s unfair. And it needs an overhaul.

 

“If last year’s bill was ‘fair,’ this year’s jump isn’t. City hall can’t have it both ways.”