by Paul McMahon City of Powell River Council has decided to reduce the city tax level for 7.35 per cent (398 residential properties) by 41 per cent, with the elimination of the flat tax. The average city tax paid in this assessment range is $708 per year, $59 per month. With the elimination of the flat tax this will reduce to $414 per year, $34.55 per month.
For less than a cup of coffee a day, $35 per month, approximately 398 of the total 5417 residential properties in the city will receive water, sewer, roads, police and fire protection, transit services, library and recreation facilities. Most households pay double that amount, $70 per month, for phone and cable services.
Homeowners with an assessed value of $230,000 and greater, 35 per cent of the residential units, will have increases to their tax bill. Conversely, homeowners with assessed values of less than $230,000, 65 per cent of residential units, will receive a reduced tax bill.
The elimination of the flat tax will impact all 12 assessment ranges. The city tax paid at the lowest range (homes with a value up to $100,000) will average $414 per year, a 41 per cent reduction, and at the highest range (homes with a value over $1 million, affecting 0.35 per cent of residences) will average $15,436 per year, a 25 per cent increase.
Should there be a minimum resident property fee / tax for city services, such as the flat tax, to complement the market value assessment system?
There is no perfect system. The effectiveness of market value-based assessment is adversely impacted by boom and bust market pressures.
The anomalies in the Powell River residential market are currently beyond the capabilities of the market value assessment system alone, to create a fair and equitable distribution of the city tax burden. The numerically higher number of older homes (lower assessed values) is caused by slow to stagnant population growth. While the majority of assessed values are declining in Powell River the older homes are declining at a greater rate, thus segueing the tax distribution, resulting in a higher percentage of tax for newer homes, which have a slower assessment decline rate. The removal of the flat tax will exacerbate this unintentional change in tax distribution.
Surely there is a minimum value for the services that the city provides to any residential home.
While Powell River may be one of the last communities to have a flat tax, the question is: does Powell River need the flat tax to achieve fair and equitable distribution of tax burden? And, does the Community Charter support modification to the tax formula?
The difficulty, to achieve a fair, equitable and uniform method of distributing tax burden in each and every municipality, is understood. Therefore, the ability for individual jurisdictions to modify the method is provided through the Community Charter, Part 7, Municipal Revenue, section 192 to 227, in which authority is given to municipal governments / council to modify the tax formula to maintain fairness, and equitable distribution of the tax burden while adjusting to the specific conditions within the community. The charter allows council to grandfather the flat tax.
I believe, at $35 per month, council has significantly undervalued the city services provided and should review its initiative to eliminate the flat tax.
Paul McMahon is a resident of Powell River.
