CTF Releases Property Tax Reform Proposal to Protect Commercial and Residential Ratepayers

• CTF Property Tax Cap Report

VANCOUVER: The Canadian Taxpayers Federation (CTF) released a property Tax Cap proposal today, calling on provincial governments across Canada to limit property tax increases to no more the rate of inflation. The proposal freezes residential property tax rates and creates a new sales-price based assessment process tied to the rate of inflation. The proposal further calls for equalization of rates across property classifications, rules to allow citizens to vote on local tax levels and adoption of more user-based funding for local services.

"The federal and many provincial governments are reducing taxes, but municipal governments are moving in the opposite direction," said Maureen Bader, B.C. Director of the CTF and the paper's author. "A property Tax Cap will create predictable payments for local ratepayers and predictable revenues for local governments by making revenues, not spending wish lists, the first consideration in the municipal budgeting process."

Unlike federal and provincial governments, municipal governments determine how much they are going to spend then determine the tax rates to pay for that spending. As a result, local property tax bills tend to be unpredictable.

"Most municipal spending increases are running above the combined rate of inflation and population growth, and it is reflected in higher property tax bills," continued Bader. "This can be alleviated by focusing on core responsibilities, moving to user-based approaches and capping property tax increases,"

The Tax Cap proposal also calls for an equalization of property tax rates across different property classes.

"Businesses are easy to hit with punishing tax burdens because business owners may not vote in local elections," said Bader. "This short-term political gain creates long-term economic pain because it promotes a wasteful level of residential consumption and less local job creation as businesses move to friendlier communities."

A CTF commissioned national public opinion poll conducted by Praxicus Public Strategies taken in August 2008, shows strong support for two of the paper's key CTF recommendations: 58% support reducing property taxes and introducing more fees for service, and 68% support the CTF's Tax Cap model.