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Property taxes: beware assessment creep

Author: David Maclean 2005/07/18

Taxpayers across the province are noticing a significant jump in their property tax bills in this reassessment year and it's no accident.

When reassessment comes around every four years, assessors and local politicians assure us that reassessment is not intended to be a tax hike. They explain that some market value assessments will increase and others fall, and the end result a wash for the municipality.

The City of Saskatoon's web site states that "overall, reassessment is revenue neutral." However, the largest single-year property tax levy hike (5.2 per cent) in the last decade happened in 2001 - the most recent assessment year. According to the Saskatoon Finance, this assessment year's forecast increase is a whopping 5.7 per cent.

An analysis of property tax data since 1985 released by the Canadian Taxpayers Federation (CTF) shows that municipalities across the province use reassessment to hike property taxes. In the two most recent assessment years - 1997 and 2001 - property taxes jumped an average 6.9 per cent, which is double the average increase in non-assessment years.

The data clearly shows that municipalities are taking advantage of reassessment to top up government coffers. One can only guess how steep the tax hike will be for 2005, but there is no reason to believe this year will be any different than the previous two reassessment years.

The CTF's report, entitled 2005 Saskatchewan Property Tax Review, also notes that municipal taxes province-wide have risen faster than inflation. Had municipal revenue increases been held to inflation since 2000, the total levy would be $488 million - not the $540 million currently collected.

Reassessment should not be a chance for municipalities to rake in more of our money. The government must introduce legislation protecting home owners from unfair and dishonest assessment-related tax increases.

Think of seniors on fixed incomes who see their property tax bill increase because people are upgrading homes in their neighbourhood. What kind of tax system increases our taxes without us doing anything different from the previous year Taxpayers can understand when property tax bills rise with inflation, but a tax hike for finishing the basement

We're not alone in suffering from assessment creep. However, other jurisdictions have managed to slay it. In the 1970's California homeowners would shudder when their neighbours sold their houses for a big price, knowing full well they would get slammed with a property tax hike the next year. People eventually revolted and Proposition 13 - a law capping increases to government-assessed value of your home at two per cent per year for as long as you own the house - was brought in via referendum. Repeated efforts to repeal the law have been rejected by California voters.

The law doesn't prevent property tax increases, but it ensures increases come from mill rate hikes and not from the real estate market, ensuring elected politicians can be held accountable for increases.

It's time to provide similar protection for Saskatchewan homeowners.