Political Folks Afraid to Talk About the "Tax Cap"—E76 [VIDEO]

Joe Ward Follow Me

Posted this 2023-12-08 6:30 AM AST

Episode 76 of a Cape Breton Podcast with Joe Ward, Boxer Shorts Media.

The CBRM has a weak tax base and suffers severely from the adverse effects of the "tax cap" or "Capped Assessment Program" on residential homes. However, with the passing of Bill 340, the Municipal Reform Act, there was almost no discussion of it. The SERMGAR report that defined a municipal wish list, created by the NSFM (Nova Scotia Federation of Municipalities), mentioned it only vaguely. I think the reason they don't talk about it, is because the political volatility attached to it scares them away from seeking (and pressing forward on) the necessary solutions. I push for accountability, and call for better solutions.

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Christine Bonnar Follow Me 2023-12-09 9:23 AM AST Reply 1 0 HERE, HERE Joe. Great points! Maybe you should run for mayor? Joe Ward My Post Follow Me 2023-12-09 11:39 AM AST Reply 0 0 If Cecil runs unopposed, I’ll have to put my big boy pants on and give it a shot. Haha :)
Mike Johnson Follow Me 2023-12-09 12:12 PM AST Reply 0 0 If Amanda MacDougall wanted to do one thing (and i think it would be her first!) to improve the economic situation in CBRM, it would be to have the Tax Cap phased out in a socially conscious manner. As you note, it will be a tough political 'Sell', but if people could be made to understand that it negatively affects ALL citizens at some point and the resulting positive impact of an equitable tax system, it could be done. And if she's only going to serve one term, (i hope), it might actually help her political career, if she decides she want to try an less challenging job, like MLA or back to Councilor. Joe Ward My Post Follow Me 2023-12-09 1:09 PM AST Reply 0 0 Firstly, as a council, I'm sure they don't understand the data very far beyond generalities made by other parties (including the CAO and finance department). So, not only are they only going on indications of what other people tell them, they also (a) don't understand how real people come to understand and accept information, and (b) aren't good at communicating even if they did—in my moderately inconsequential opinion. That's more or less why everyone goes for a slow phase out. It dampens the experience of anyone adversely impacted, and gives the system some time to regulate. I actually think that's too slow, because it makes it a decades-long fix, even after we've already spent decades with the tax cap system distorting everything. Regardless of the solution, we have the ability to offer individualized projections to each and every homeowner. There are some who think it's the end of them financially, who might receive their projects and say "Oh, that's not so bad after all." My solution is based on the idea that if new money comes into the system, we don't have to take forever to remove the cap. Restore the Houston $15 Million, and use it to drop the net total revenue that we need to collect, and then pull the cap off so that the $15 Million ends up dampening the blow for those who will see a bigger jump. And then model it to decide if we can rip the bandaid off in 1, 2, or 3 years.
Christine Bonnar Follow Me 2023-12-09 7:46 PM AST Reply 0 0 Back in 2016 or 2017 we went to Sydney for a meeting about removing the tax cap on residential property. Present at this meeting was John McKinnon, Marie Walsh, Eldon MacDonald and Steve Gillespie, to name a few as I didn’t know all of them. At that time, they explained how this would help lower the tax rate to all new migration and people moving within the CBRM purchasing new homes. They explained how they would not hit the low income with a burden of high tax rate, but would be done at a slower pace , I think over a number of years. They said they would not let anyone fall by the waste side, that they would be there to help with low income. Some were very excited about this and others were not. My impression was they were going to try and get this passed, but I heard later that the provincial government implemented the tax cap and they were the only ones that could remove it…..and they said no So, as far as I understand, the mayor and councillors have no say in regard's with the tax cap. Please correct me if I am wrong. Joe Ward My Post Follow Me 2023-12-09 7:58 PM AST Reply 0 0 That was a good meeting. Lots of representation from multiple perspectives on the topic. Walsh/MacKinnon were explaining how the phase out structure would work. I don't recall if it was 7 or 10 years at that time, but same basic principles. They recognize that those who don't have cap protection (or much cap protection, with a recent purchase) are getting gouged. But, they also recognize that people who have held the cap for a long time (sometimes since its inception) are worried about the removal, as our high tax rates makes that significant. And, many have a large chunk of their home value sheltered. This group is comprised of more than seniors, but long-time residents who happened to be seniors who have kept their homes for decades are definitely a key segment of this group. One of the things they proposed, which I do not believe is that after removing the cap, they would remain revenue neutral. In other words, they were proposing that they weren't trying to make more money from us; they were only trying to make it fair for everyone and remove the distortionary effects. The reason I don't believe it is that once those who pay too much pay less, and things are more balanced, it's quite easy to simply boost the tax rates and take more from us at that time. Right now, it's very difficult to do as the rates are through the roof and people carrying mortgages are feeling it big time. But the other selling point was that the rising taxes for those who hold cap protection now would be minimized, because it would be a slow introduction, and the overall tax rate would drop as things started to level out. It's at this point that I call for modelling. Specifically, just calculate what everyone will pay, forecast the changes over 5-10 years, and let them see how significant the impact will be—or not. Mail it to them. Then let them know the intention once they can see what it'll look like for them. (continued) Joe Ward My Post Follow Me 2023-12-09 8:04 PM AST Reply 0 0 I also suggest that a simple approach isn't necessarily the only one. Since the key resistance is from people that will pay more, one way to mitigate that concern is by making sure that either doesn't happen, or that the increase won't be as much as they'd expect. The way to do that is by pulling back that $15 Million (or more) from Tim Houston, but only permitting its use to offset lost revenue from lowering tax rates, while the cap is removed. So, imagine in year 1, people are expecting to pay a certain amount more as some or all of the cap is lifted. But, at the same time, the $15 Million is injected into CBRM tax coffers to offset that. Therefore, even though they might pay more, it's being subsidized quite a bit. This could be applied by a base rate change for everyone, or it could have some mechanism to discount rapidly rising tax bills from the cap removal, to try to minimize the damage while everything normalizes. Given that approach (new Houston money subsidizing the tax increases), I also think that removal over 7-10 years is way too long to save anyone or to fix the tax base. We could do it in 1 to 3 years, depending on how much money is authorized by the province to subsidize the process. Everyone who will pay less will be all about cap removal in any form. But, the problem for politicians is that anyone who will pay more (especially when they don't know how much and imagine it to be a large amount) will fully dedicate themselves to helping get any politician that supports it ousted. Not necessarily joining campaigns (ha ha), but the organic way we lose confidence in politicians and let it be known by word of mouth and other methods. It's extremely volatile. With my methods of modelling and notifying them by mail, and subsidizing it, we could pull it off. (continued) Joe Ward My Post Follow Me 2023-12-09 8:17 PM AST Reply 0 0 (I lost my 3rd post. Will give it another shot) Yes, the province controls it. But, the CBRM is most impacted. Like anything else with need from the province, or the feds, we have to be the leading advocates for it. It's probably a legislative change to the MGA. But, it could also be pulled off as a special permission of a CBRM charter, giving us the ability to move ahead of the rest of the province in testing the removal, as lab rats. The NSFM (Nova Scotia Federation of Municipalities) also has the phase out as a key objective. Until recently, Mayor McDougall-Merrill was the NSFM president, concurrent with her mayoral role. However, when the NSFM issued their SERMGAR report (as published by the CBRM), it was a wish list for what they wanted in Bill 340. However, the only reference to the tax cap was a vague reference to "new tax" tools in a section for future consideration. I believe that was done on purpose as the provincial representatives likely said it was not on the table, and didn't want it becoming a "distraction," as John Lohr might call it. But, it's not going to happen if they don't push for it, and it looks like that's not going to happen.