Sun
The province’s plan to freeze property value assessments is sowing confusion while offering few benefits.
The plan announced recently by Premier Gordon Campbell at the annual Liberal convention in Whistler has been widely misinterpreted. It doesn’t freeze property taxes, just the assessments used to determine how much each property owner will pay in the coming year.
It probably wasn’t meant to be confusing, but when the minister in charge of its implementation appears to arguing the opposite to what the premier has announced, it’s clear there is a serious problem.
As announced by the premier, the new annual property tax assessments done this year won’t be used. Instead, legislation will be brought in this fall to use the valuations set last year, on July 1, 2007.
That means when property owner get their assessment notices in January, the valuation should be the same as they got last year. If assessments weren’t set at 2007 levels, the assessments would have been higher for some homeowners, because on July 1 the market was at or near its peak.
Housing prices have since fallen in varying degrees depending on the kind of dwelling and location, so the assessment would not have reflected the up-to-the-minute value of individual properties. That, Campbell said, would have created needless confusion and led to a flood of appeals.
The flaw in that logic is that assessments sent to homeowners never reflect the up-to-the-minute value of their property. They are always six months out of date, because of the time needed to process all the information used in their preparation.
The important thing about assessments is not their absolute value, but their relative value. How does your property compare to similar properties? That is the only way of judging whether the assessed value is fair.
Despite the fact that the premier said he was “locking in” and “freezing” the assessment rolls, Kevin Krueger, the minister of small business and revenue, has been working hard to assure British Columbians that their assessments have not, in fact, been frozen, that they can still be appealed if property owners feel they are unfair.
But on what basis are they going to be able to appeal? The values they have to compare will be 18 months out of date, so the kinds of changes that affect how much tax property owners pay won’t be reflected in the assessment they receive.
If your property has gone down in value because the value of your neighbourhood has declined relative to other neighbourhoods, for example, you will be paying more than you should.
So what a freeze does is prevent the assessment authorities from resolving the inequities that arise over the course of a year between properties and neighborhoods. Next year, assuming the freeze comes off, the shock of resolving inequities will be that much greater.
It’s still not too late to drop this silly idea. Instead, assessment notices should go out with an explanation of how the system works, so that property owners can know that as long as everyone’s assessments are a bit high, no one will pay higher taxes as a result.
If your taxes go up, it’s because your municipal government set a mill rate that was designed to raise them. That will happen regardless of how long the assessment rolls are frozen.
© The Vancouver Sun 2008