Capped Assessment Program (CAP)
In 2005, the Province introduced the CAP in an effort to protect property tax payers from sudden and dramatic increases in assessment. After seven years of experience with this system, Nova Scotia municipalities and their citizens are being seriously impacted by the program in the following ways:
- The existing Capped Assessment Program increasingly disadvantages those building homes and those buying properties as these properties are not capped in the first year. Economic development can be stifled by making new home purchases less attractive.
- With the Cap currently set at CPI, the program has moved away from addressing sudden and dramatic assessment increases and instead results in arbitrary tax redistribution among and between capped and uncapped properties. These unintended effects are often misunderstood by taxpayers and difficult to explain or defend.
- The Cap Program severely distorts the market value system which is regarded as the least regressive form of municipal tax allocation. Capping makes the overall municipal tax system more regressive, complex and inconsistent.
- The Cap Program does not effectively assist residents on low or fixed incomes who are challenged to pay their property taxes. In fact, the current program transfers the property tax burden to home owners with lower assessed properties. This demographic often represents those on lower or fixed incomes. Other programs are available to better help this group of home owners.
- The Cap system takes away from the core market value assessment work of the Property Valuation Services Corporation.
The UNSM urges the Provincial Government to eliminate the Assessment Cap Program in a phased manner, replacing it with other programs that offer assistance to taxpayers who are truly challenged to pay their property taxes.
Municipal Tax Study
UNSM is collaborating with PVSC and AMA to have an independent study of the current property tax system undertaken. The need for the study is evident as the public generally do not understand the property tax system, and there are frequent calls in the media and at public meetings for change. The purpose of the study is to assess the effectiveness of the municipal property tax and to suggest opportunities to improve the current system in Nova Scotia. The Minister of SNSMR, Mark Furey, has expressed support for the study.
Two prominent researchers have been engaged: Dr. Enid Slack, and Dr. Harry Kitchen, both of whom are well regarded and recognized as experts in the field of municipal taxation. To ensure independence, the process for the review will be left up to Dr. Slack and Dr. Kitchen. The study will begin this January, with the final report expected in April or May. The lead researchers will undertake some consultation, as they see fit. The final report will be made available and comments sought at that time.
Any comments or suggestions on the study can be sent to Betty MacDonald, who can forward them on to the researchers.