People are concerned about volatile property taxes, and rightly so. While federal and provincial taxes are falling, property taxes seem to go nowhere but up. Recently, Premier Gordon Campbell announced a freeze of assessed property values at 2007 levels to "create certainty for homeowners, businesses and local governments." Yet, freezing assessments doesn't prevent property taxes from rising.

The Ontario government similarly froze property tax assessments in June 2006. In spite of the freeze, property taxes in Toronto went up by 4.2% in 2007. If our premier wants to "create certainty for homeowners, businesses and local governments," he needs to freeze property tax rates. The property Tax Cap proposal just released by the Canadian Taxpayers Federation may provide the tonic.

Property taxes go up because municipal spending increases consistently outstrip the rate of inflation. That's because spending, not revenue, determines how much property tax ratepayers will pay. Municipal governments create spending wish lists then distribute that across the different property classes, such as residential and business. The B.C. Assessment Authority determines the assessed value of each property in each class. The property tax rate for each class is determined by dividing the spending wish list by the average-assessed value for each class of property. If assessed values stay the same, but the spending wish list gets bigger, the property tax rate will get bigger too, and so will your property tax bill.

Just how out of line have municipal spending increases become Between 2000-2007, municipal expenditures in B.C. went up by 41%. At the same time, inflation rose by 14.5% and population grew by 8.44%. Freezing property assessments will do little if anything to stop the property tax burden from getting bigger because out-of-control municipal spending is driving property taxes even higher.

Where has spending increased Protection of persons and property went up by 51.3% between 2000-2007. Not sure why when according to the Ministry of Public Safety and Solicitor General, in 2007, crime reached its lowest level in 30 years. Spending on the environment increased by 60.4%, with the cost of garbage collection going up by 45% and a mysterious "other" environmental category increasing by 264%.

Okay, so if property tax rates are frozen, how does a municipality accommodate for growth The CTF's Property Tax Cap proposal limits assessment growth to the rate of inflation -- a family's actual property tax bill would be frozen at its current level and allow for cost-of-living-adjusted growth in the future.

Capping municipal revenue growth limits its ability to simply spend what it wants. Municipalities will have to provide services more cost effectively and charge fees for services where appropriate. For example, Winnipeg, a city of about 700,000, now saves more than $6 million per year since it contracted out its garbage collection. A focus on cost-effective service delivery is the answer to ever increasing property tax burdens.

Freezing assessments won't stop property taxes from rising because spending increases trigger higher property tax rates, meaning tax bills will continue to go up. Municipalities are creatures of the provincial government and the premier has the opportunity to contain the property tax spiral. But the government must do more than "appear" to be doing something about out-of-control municipal spending and ever increasing property tax burdens. It must cap property tax rates.