Sometimes people think a 5% increase is really high...
Council seems content with perpetually increasing taxes.
2018 Average Tax Bill = $1,494
2023 Average Tax Bill = $2,016 (+36%)
2028 Average Tax Bill (forecasted) = $2,573 (+72%)
Last week, West Nipissing Council met once again to finalize plans for the 2024 budget.
After much deliberations, it appears council is still leaning towards raising taxes by approximately 5%.
But their two hour meeting (available on Youtube) provided an interesting exchange that I want to provide more insight on.
Councillor Dan Gagne who appears to be in favour of pushing another 5% tax increase pleads with his fellow councillors.
“Sometimes people think that an increase of 5% is really high. But when you bring it down to how much it’s really going to cost you in a full year. $50… It’s not even $5 a month.”
The CAO concurs but corrects the councillor that a 5% increase represents approximately a $100 annual increase per household.
2018: Lowest Taxed Municipality in Canada
In 2018, West Nipissing received the prestigious recognition of having one of the lowest tax rates in the country. Just five years ago, the average property tax bill in our city was $1,494.
Since then we have seen +5% increases during three of the last five years. This culminated in the average tax bill climbing to over $2,000 for the first time ever in 2023.
2018 Average Tax Bill = $1,494
2023 Average Tax Bill = $2,016 (+36%)
2028 Average Tax Bill (forecasted) = $2,573 (+72%)
*These are just the averages. Anyone with a house valued at over $400,000 which is not uncommon anymore will be paying closer to $5,000 per year soon.
Not even $5 a month…
When watching these deliberations, I was shocked to hear the casualness to a 5% increase. It’s almost like they have just come to accept this as the norm…
But Mr. Gagne was absolutely wrong when he implied that sometimes people THINK that a increase of 5% is really high. Because IT IS REALLY HIGH.
Let me explain with simple mathematics.
The average homeowner is not just paying an extra $8 a month this year. They are paying it for the rest of their lives. And if the tax rate continues to go up 5% every year, then the $8 a month will simply compound. A 5% increase every year will result in cumulative costs on the average taxpayer of $1,616 by 2028. Alone, the cumulative increase over the next five years would have been enough to finance our entire municipality in 2018.
How can just the increases amount to more than what was needed to run the entire city just five years ago? What has drastically changed and what services have been added to justify the desire to double the overall tax revenue over a decade (2018-2028)?
Taxes Already Go Up Before Rate Increases
A little known fact that politicians and municipal leaders try to avoid is that tax revenue goes up every year regardless of any tax increase.
At least week’s meeting council received the annual MCAP Property Assessment report. Every 5 to 10 years, MCAP undertakes assessments of every property in the province and evaluates them. These are the values that municipalities apply their tax rate to.
Although the last assessment was done in 2016, MCAP still adjust the values of properties every year based on the 2016 data.
In 2023, our total pool of properties went up from $1.76B to $1.8B representing a 2.24% increase. This means West Nipissing will have 2.24% more property tax revenue before approving any increase whatsoever. This happens every year…
So, city leaders cannot continue to simply justify increase after increase because of inflation. Yes inflation may have run a little higher but they cannot ignore the fact that some of this has already been accounted for in the property valuations.
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