Was reading this commentary from Ricky Leong at the Calgary Sun. In it, he writes:
According to the proposed adjustments to city spending in 2010-2011, Calgarians should expect a property tax hike of 4.8% next year — about a percentage point less than previously forecast.
While this is a reasonably accurate statement, it misses the implication. In fact, property taxes aren’t expected to hike by 4.8%, the municipal budget is. A budget increase of 4.8% does not directly translate into a 4.8% increase in yours and my property taxes.
This is because the assessment of property varies from year-to-year and is based upon revenue neutral principles. So, if the average property increased in value by 5%, and your property increased in value by 5%, and there was no increase in the budget, then your taxes will not increase. Likewise, if the average property increased in value by 5%, and your property increased in value by 5%, and the City increases the budget by 5%, then your property tax will go up by 5%.
However, not all property goes up (or down) by the same amount. For 2010 assessments, some properties will have increased, and some will have decreased. Thus, some will see their property taxes go up, and some down, depending upon how the value of their property changed in comparison to the mean change.
I guarantee you this, there will be a significant number of residential and business property owners who will see their property tax increase not by 4.8%, but by 20%. Yep…20%. Guaranteed.
{ 2 comments… read them below or add one }
Because the 4.8% is an “average”, if you assume someone’s tax will go up by 20% your logic would also dictate someone else’s tax has also gone down by 10.4%. So – and I’m genuinely confused here – what’s the point your making again? 4.8 is an an average? Property values vary? I’m trying to find some deeper meaning in your assessment but having difficulty.
Don’t look too deep. There’s no particularly thoughtful and nuanced thought to take from it.
In my line of work, I frequently talk to people who don’t particularly understand the property tax process. Some of those find themselves both thoroughly annoyed and baffled when the budget has risen by a much announced 5%, but their tax increase has been double or triple that, or in some cases, ten times that.
The point that was obviously not made clear in my original post is that it is not exactly helpful to announce that “property taxes will rise by 5%”, as while that is technically correct, it seems to feed people the idea that their tax is going to go up by 5%. I’m of the opinion that consumers of information will tend to personalize that information. Thus, someone hearing this information will paraphrase the news as, “MY tax is going up by 5%”. I think it is more helpful to be clear that the budget is increasing by 5% rather than property taxes themselves.
On further reflection, a deeper meaning that I would have included in the post had I put more care into its writing would have been that it is unhelpful to present property taxes as increasing. It is the same as saying that my allocation of income to household bills is increasing. It is a step away from the actual source of the increase. Property taxes increase because the budget increases, just as my household bills increase because my heating bill is increasing. To present it as the former in either case misses the actual cause of the increase, and only speaks to the effect. In my mind it would be clearer, if only at a sub-conscious level, to state that the municipal budget itself is increasing, which will tend to make the root cause of the increase that much more visible.