Flat-rate taxes ‘not perfect’ but‘fairer, more sustainable’
It’s easy to sow outrage through lies and misinformation, it’s much harder to inform.
A municipality uses property value to determine taxes, it does not have the authority to modulate taxation based on age or income.
La Pêche council was innovative in December 2019. Rather than funding fire safety and the police solely by property value, council used a combination of flat tariffs and property value in its 2020 budget. Since then, half the budget of the fire department is covered by a tariff, half by property value; a quarter of the police budget is covered by a tariff, three quarters by property value.
In [Ward 2 councillor] Michel Gervais’ Letter to the Editor (“Fire, public safety flat-rate taxes ‘unfair’,” The Low Down, Feb. 3 edition) he says that council did so following the request of cottage owners. That is false and divisive and omits the fact that property value is property value, regardless of it being from a primary or secondary residence. Council did so to diminish the effect of unevenly evolving property values on our residents’ tax bills, which was clearly explained at the time.
Over the years, property values have evolved very unevenly in La Pêche. Mostly driven by the real estate market, property values are updated every three years. Over the last five updates, properties have gone up in value by an average of 38 per cent in 2007, 19 per cent in 2010, 13 per cent in 2013, 16 per cent in 2016 and four per cent in 2019. But remember, those are averages. Regardless of the investment you may have made in your property, its current evaluation will also have been modulated by the effect of real estate transactions around your neighbourhood throughout the years. You may now have a property that has gone down in value, stayed about the same or increased. It may even have increased more than twofold. A twofold increase may not bother you if you can afford the ensuing increase in taxes, or it may be a good thing for you if you want to sell, but it may also put a big stress on your finances and force you to move.
The median property value in La Pêche is around $250,000. While the correlation between income and property value increases with property value, the correlation is not very strong with properties close to the median. Of course, someone who owns a property worth $1 million most likely has a greater income than someone who owns a property worth $200,000. But is that true of someone who owns a property worth $400,000? And what if the $200,000 property is a secondary residence like a cottage or a rental property? And what if a person owns multiple rental properties worth $200,000?
We can’t tell the income of the property owner based on the value of the property itself. By using a combination of tariffs and property value to fund services, every property owner pays the same flat tariff for a property, as well as a variable amount proportional to property value. This is not perfect, because again, we cannot modulate taxes based on income, but it is fairer and more sustainable, which we should always strive for.
Guillaume Lamoureux is the mayor of La Pêche.