Jan. 9, 2018

The confusing interpretation of property taxation.

Property assessment notices came out at the turn of the new year, and like years and years before them, the general taxpayer will not understand how that translates into property taxation. The following was a column I wrote last year at this time and bears repeating.

Taxation is complicated because it is based on a number of variables. It all starts with assessment, done by an independent body not answerable to local jurisdications. Assessments are based, in part, on market trends in real estate, as of the previous July 1. Part of that is achieved by comparing properties to similar ones that have sold recently in the same vicinity. You can see how subjective and volatile that can be in today's market.

That creates the assessment roll on which the city then determines how much money they need for the new budget, and by setting a percentage of the total assessment roll, (combined all properties in Nanaimo) and that creates the tax rate on which you tax bill is established.

So, if the city decides to keep it's total tax collection the same as last year, then there will not be any increase in the amount of tax collected over all. (With minor exceptions).

That should make everything hunky-dory, if your assessment remained the same as the average. However, if your assessment increased more than the average, then even with the city rate remaining the same, you have a greater starting point, thus increased taxes. The opposite is also true, if your assessment decrease is below the average, then you should get a tax decrease.

My my own case, my assessment went up more than the average, so I knew my tax bill would be going up. And it did.

Clear as mud, right? Well, there's another little thing. Sometime elected officials move the goal posts while they're playing the taxation game – take some city services off the tax bill and charge user fees instead. But that's another kettle of fish. User fees are a tax by another name, plain and simple. Thus they are taking from one pocket and putting it into another.

The city's share of taxes is only one portion of your total tax bill. The city sets it's rate, but the Regional District of Nanaimo set its own rate. There are other jurisdications as well. But even with a tax rate freeze, the city share of your tax bill can still go up or down.

Following are the "Levies collected on behalf of other agencies."

The Municipal Finance Authority.

Nanaimo Regional District General

Nanaimo Regional District Parks

Nanaimo Regional District Sewer Benefitting Area

Nanaimo Regional General Hospital District

Regional Parks and Trails Parcel Tax

Vancouver Island Regional Library

Then there's the really big elephant in the room - school taxes collected on behalf of the Province of B.C. 

City staff have tried for years to explain the relationship between assessment and taxes and still only a small per cent of the public really understand.

I would venture there are city councillors who don't understand. 

Merv Unger is a retired journalist and former city councillor, living in Nanaimo.