Monday, January 17, 2011

Property tax burden unlimited

What would your boss say if you walked into his office and said, "hey, I've done the analysis, I've talked to all my friends, they think I deserve it, so I'm giving myself a 50% pay increase!

Probably something along the lines of, "you're kidding," if not, "you're fired."

So why do municipal politicians in British Columbia think they can increase their pay level just because everyone else is doing it?  Because they get away with it every time, that's why. What does this mean for a homeowner's property tax burden? It means it will go up, year after year, with no increase in service, but with increasingly high-priced help. 

In the Vancouver Island community of Esquimalt, the Mayor is considering a pay increase of 50 per cent. Meanwhile, residential property tax rates are higher than those in Victoria, and the property tax burden has skyrocketed. In 2010, Equimalt's residential property tax rate was 4.6, while Victoria's was 3.66. 

A homeowner's tax burden in Esquimalt is higher than that in Victoria. As the charts below show, the per person property tax burden in Esquimalt went up by 65 per cent between 2008 and 2010.  
 
Esquimalt
2010
2008
% increase (08-10)
Property tax burden
$10.3 million
$9.16 million
12.45%
Property tax per person
$584
$355
65%
source: Schedule 707_2010 and 2008
 
In Victoria, the burden has also gone up, but by 10.4 per cent.

Victoria
2010
2008
% increase (08-10)
Property tax burden
$47.6 million
$41 million
16%
Prop tax per person
$575
$521
10.4%
source: Schedule 707_2010 and 2008


Until politicians' ability to spend and increase taxes is limited, property taxes will continue to rise year after year. That's because municipal politicians first decide how much they are going to spend and then decide how much taxes have to go up by to pay for it all. One answer is a cap on property tax rates. That way, politicians would know how much revenue they would have available and then would have to - gasp - prioritize their spending, instead of just hiking spending every year.