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Last updated at 12:36 AM on 25/11/09  

Government to tie property tax increases to CPI print this article
WAYNE THIBODEAU
The Guardian

The P.E.I. government plans to tie property tax increases to the Consumer Price Index, which means most Islanders will not see an increase in property taxes on their bills next May.
At Province House Tuesday, the province introduced changes to the Real Property Assessment Act that will tie future property tax changes to the Consumer Price Index or CPI in Prince Edward Island.
CPI has been firmly in negative territory in 2009. That should mean no property tax increases for Islanders this year.
Property tax increases will be capped at five per cent, even if CPI goes beyond five per cent.
If CPI dips below zero, as it is now, property taxes will not drop. The minimum rate is zero.
Provincial Treasurer Wes Sheridan says the changes being introduced will create a fair and transparent process to setting property tax rates.
“Before it was just an arbitrary number that was just thrown out,” Sheridan said in an interview with The Guardian.
“Now, we’ve made it a very clear and transparent process. It’s just simply your assessment value from the year before, add on CPI for the province for the year before and that will be the growth in assessment that everyone will see right across the province.” 
For the past three years property taxes have been frozen on the Island.
Freezing property taxes was one of the promises the Robert Ghiz Liberals implemented after they were elected in 2007.
With that three years up on March 31, 2010, the province needed a new plan.
Opposition finance critic Jim Bagnall said he’s fearful the proposed changes could curb housing sales in the province.
That’s because the proposed legislative changes also include a section that would establish the base rate for property taxes at market value, instead of the assessment value, when a house is sold.
Future property tax increases will then be tied to CPI.
Bagnall said these changes are coming at a bad time, considering much of the global economy remains in a recession.
“Whoever buys it is going to be hit with maybe twice the taxes that I’ve been hit with,” Bagnall told The Guardian.
“They’re banking the taxes for the new owner.”
Of course, if a property owner upgrades their property the value of the home will increase and in turn the amount of taxes that property owner will pay will also increase.
There have also been changes made to the property tax bill which Sheridan says will make it easier to understand. Those new bills will be out next spring.
“The bill is going to be very straightforward,” said Sheridan.
“I’m very pleased with what the department has done with making that more clear and transparent for property owners.”

25/11/09  


Comments:
This Conversation is Moderated. What is moderation?

In The Market from Charlottetewn, PE writes: Shouldn't the headline of this story be Home Buyers to be Gouged , or Province to Put Brakes on Housing Market ? Taxing at true market value is going to vastly change the circumstances for those considering buying a new home. This is an incentive for every home owner, or potential home owner, to stay where they are. Has this government made it a policy to alienate as many Islander voters as possible?
Posted 25/11/2009 at 6:53 AM | Alert an Editor | Link to comment
John from PEI writes: If I downsize my house then the new owners get hit with a big tax increase. When I buy my new smaller house I will end up paying more taxes with the new formula than I paid in my older house that was worth more. Greed greed greed, is it any wonder that as we get older and wiser that we start to look down on politicians that we once looked up to.
Posted 25/11/2009 at 8:18 AM | Alert an Editor | Link to comment
death and taxes from pe writes: Thanks for making it clear and transparent that we're about to get gouged by the government on our property taxes. Sheridan's just trying to rake a bit more of that PNP boom back into government coffers through a back door property tax. Hope Sheridan will be doing the same for luxury SUV sales.
Posted 25/11/2009 at 8:50 AM | Alert an Editor | Link to comment
David from PEI writes: This is no different than before Sheridan... the owner occupied credit brought taxes in line with CPI in prior year before the freeze, let's not forget that assessments have been going up regardless of the freeze so everyone is going to see increases next year...

Not to mention the property tax assessors that are lurking around to try and jack up your assessment...

You don't fool anyone
Posted 25/11/2009 at 9:12 AM | Alert an Editor | Link to comment
Andrew Chisholm from Charlottetown, P.E.I. writes: I'll admit to not knowing a lot about CPI, economics, taxes, etc. But what I do know is the CPI drops when the economy is not spinning as it normally does. Would it be a good idea to drop property taxes every time our economy is not performing as it should? Government needs money during tough times. So what, more deficit?

Again, I admit not knowing how all these things function. If someone can address my concern then please do.
Posted 25/11/2009 at 9:13 AM | Alert an Editor | Link to comment
Wayne MacKinnon from Marshfield, P.E.I. writes: I do not desire to be negative about this government nor this program. I desire to be able to live and pay my cost of living. But I know longer feel comfortable with politicians because the system is corrupt.

Why can gov't not govern with honesty and integrity? Why can they not manage our province in such a way that it is sustainable? Why can they not realize we only have a population of 140,000 people to pay for the services we require?

We can not afford a rink, a hosipitlal, community centre, etc. in every ones back yard. We can not continue to make millionaires out of all the friends of the politicians and subsidize companies like the Irvings anymore.

We just can not afford to do so any longer without causing a reduction in our healthcare and education and other goods and services we require.

Let us all demand government to live within our means and stop gouging our hard earned tax dollars. Money does not grow on any trees on my property that I own. We owe it to ourselves, our children, and the future generations.
Posted 25/11/2009 at 10:20 AM | Alert an Editor | Link to comment
My View77 from PEI writes: I would respectfully suggest that Mr. Sheridan and our Government go back to the drawing board before Islanders' begin protesting in the streets.

Anything to do with Citizens' taxes being tied to the P.E.I. Consumer Price Index couldn't possibly be viewed as something positive or cost effective for tax payers !

During such present economic down turns and unpredictable forecasts for the future we need to ensure our Real Estate Market remains competitve! This plan will serve only in having a complete opposite affect! Our Real Estate market will definitely suffer. This will have a negative impact on our Economy as a whole!

It seems our Government is trying to ENSURE their popularity continues to decrease!

(Provincial Treasurer Wes Sheridan says the changes being introduced will create a fair and transparent process to setting property tax rates.) Fair to whom? What good is transparency when it only highlights tax increases and a futher tax debt load on Islanders?

I sincerely hope our Government gives this plan more serious consideration!
Posted 25/11/2009 at 10:33 AM | Alert an Editor | Link to comment
Mark from PEI writes: Taxes never go down, no matter how you spin the formula. They have an operating budget to meet, which increases every year because people will get raises and things need to be replaced. If assessments go down, they just raise the rate to compensate and vice versa. My concern is that the property values should be based on an objective process to obtain the assessed value, which should be used as a basis for the property tax (which accounts for condition, improvements and depreciation), not the market value which is more subjective and what someone is willing to pay if they really wanted it. The article is confusing as it mentioned current property tax + CPI = new tax (again never to go down) and then it muddies things by talking about marketing value and then assessed value. Perhaps someone can dig into this more and provide a clear summary of CURRENT versus PROPOSED in some type of chart or table?
Posted 25/11/2009 at 10:40 AM | Alert an Editor | Link to comment
bill from pei writes: the liberals are better than other parties at raising taxes and or inventing new ones--start back with clements and his tire tax, on to cheverie with his extra tax on the private sale of a car , the ghiz gov't 1990's surtax on gst----i can make a long list
This one is another SNEAKY , STINKY liberal tax--they still remember the 7.5% tax that they recently spoke out against as being against their nature now. ---------------------
they really should be careful or they'll be calling callbeck in to prepare the tunnel for another SNEAKY venture
Posted 25/11/2009 at 10:45 AM | Alert an Editor | Link to comment
Enough is Enough from PE writes: And all of the sheep just keep following.
It's time there were a few protests in the streets.
Posted 25/11/2009 at 11:14 AM | Alert an Editor | Link to comment
help S,O,S, from Souris, PEI writes: My head is spinning. George Webster's -Mid-Isle farms getting PNP's, and million dollar right off's of the Food Trust - a Crown Asset- before they get it for a song. The two-tier attack on minimum wage earners and now this tricky little major increase in property taxes - and taxes on the sale of property.
I doubt there ever was a time in history where the electorate was so ready to throw a government out of power.
Posted 25/11/2009 at 11:24 AM | Alert an Editor | Link to comment
Daniel from PE writes: The only one being hurt here is the seller. The higher tax rates will serve to push down the market value of the house (simple economics of demand), therefore the buyer will end up purchasing closer to the assessment value. The result is that the buyer pays about the same taxes they would at assessed value but the seller receives a smaller return on their investment.
Posted 25/11/2009 at 12:12 PM | Alert an Editor | Link to comment
and the beat goes on from pe writes: I was of the impression that the idea was to build up the economy, not tear it down. Who in the think tank figured that by raising taxes more people would buy houses. I know a group of Grade fours that know better then that.
These politicians live by the motto of W.C. Fields who said Never give a sucker an even break
Posted 25/11/2009 at 12:24 PM | Alert an Editor | Link to comment
Caroline MacKinnon from Charlottetown, pe writes: You have sealed your fate in any future election with this proposal!!!!!!!!
Posted 25/11/2009 at 12:43 PM | Alert an Editor | Link to comment
Ashamed from Charlottetown, PEI writes: I have been a liberal all my life, both federally and provincially.

From this day on I will never, ever vote provincial liberal again. I am not much but a drop in the bucket but those drops will add up when the liberals have seen how Islanders are getting gouged once again.
Posted 25/11/2009 at 12:56 PM | Alert an Editor | Link to comment
bill from pei writes: make no mistake about it--CPI seldom decreases and is a government generated number open to all kinds of shady input and interpretation if someone wants to change a definition or two
this tax will hurt young people the most because they are the future buyers(and rebuyers)
it hurts the seller twice if that person plans to re purchase -it will be harder to sell the house because of the higher impending tax to the buyer and will sting again if you have to pay tax on the market value of the newer house
if the younger person ,in the first instance sells and rebuys as the family
grows--GUESS WHAT ---TRIPLE WHAMMY complements of the liberal gov't and of course when the conservatives get in they willl take the money --do you think they will give it back to the taxpayer no matter how much foolishness they spout now
Posted 25/11/2009 at 1:13 PM | Alert an Editor | Link to comment
Gerry from pe writes: This will have a domino effect. If people are hesitant to purchase because of the TRANSPARENCY, and homeowners are afraid to sell because of the TRANSPARENCY, then that puts the construction industry at a disadvantage in addition to their suppliers, so on, and so on. It will be a lose, lose situation.

What are the success stories to date for the Liberals? None that come to mind.

I often visualize the Liberals strategizing in a frenzy. Nope, that didn't work, so how about this? Nope that didn't fly either. Dear Lord, send someone to help us !

If the underlying intent of this moronic idea is intended to reduce the deficit, then the Liberals had better go back to the drawing board.

Disgusting is the only permissible, non-expletive, word that describes this pathetic CURRENT government.
Posted 25/11/2009 at 1:17 PM | Alert an Editor | Link to comment
turnip truck from pei writes: Wes will soon be announcing the combining the GST AND PST. This will be done after the next election in order to get the deficit down .Wes,robert and boys will con us again. You watch!
Posted 25/11/2009 at 1:22 PM | Alert an Editor | Link to comment
OLd Tory from P.E.I. writes: There should be no more increases in property taxes, the liberals are trying to tax seniors out of their homes; they are trying to tax country people out of their homes and off their land. You get double taxed if you don't farm your land or rent it to a bona fide farmer. If people want to live in overpriced houses in Stratford and/or Brighton where the prices have been artifically pushed up by government over assessment; overzealous realtors trying to squeeze the last drop of commission out of every sale and greedy bankers and appraisers vieing for bigger fees and more profits, then so be it but let them pay for it, not the rest of us.
Posted 25/11/2009 at 2:24 PM | Alert an Editor | Link to comment
Rob Mceachern from Priests pond, Pe writes: Well Wes your going back to your teller wicket sooner than you think
20 comments and all negative, all disgusted voters and many of us liberals, not even any tripe from Bruce. gutting the real estate market

WE NEED RECALL LEGISLATION

With all the bad news this ghiz clown show is producing what will the province look like in another two years. This is getting very scary.
Thank You
Posted 25/11/2009 at 3:23 PM | Alert an Editor | Link to comment
I Like It from PE writes: Not sure how most of the comments above mine have anything to do with this story but this sounds like a fair adjustment to me. I have an economics degree and understand the logistics of inflating with the CPI. If somewhere is purchasing a new home the chances of taxes being lower than before are just as likely as they are to be higher within the next few years. That being said, in terms of the total expenses involved in buying a house, this change is miniscule. I think the big thing is that existing home owners have a freeze on the property tax they currently pay. Not sure how that can be spun negatively.

I think stating this adjustment has sealed the Liberals fate in any future election may be just a touch extreme. Keep up the life-and-death commentary on every minor announcement from government though. It's entertaining if nothing else. Thanks.
Posted 25/11/2009 at 3:44 PM | Alert an Editor | Link to comment
Quiet Island from pe writes: You call in the quiet island. It will be very quiet when everyone moves away as they cannot afford to live here anymore.
Who is going to pay your over inflated salaries when there are no taxpayers left for you to drain.
Posted 25/11/2009 at 5:05 PM | Alert an Editor | Link to comment
Time to Sue from Char, PE writes: Whoever buys it is going to be hit with maybe twice the taxes that I’ve been hit with,” Bagnall told The Guardian.

This means the new owner will pay more than the old owner.

Can you say see you in court.

Surprised the legal folks let this one through.

I know I'll be suing when we buy.

Can't treat two groups differently, sorry folks. It's either market value for everyone or assessed value for everyone.

Another stupid Ghiz move that will end in the courts.
Posted 25/11/2009 at 5:40 PM | Alert an Editor | Link to comment
scott from pei writes: you people need to sit back and relax, take a deep breath and put this into perspective.

our home is assesed at 165000. market value is 172000. result? 7000.00 increase.

result? not a big deal of difference. even with 4 % cpi ( and its been running about half that) it amount to one tank of fuel in your truck a year. if that gonna break you, you were broke a long time ago. no one is happy about more tax, but at least put things in perspective before y ou cry doom and gloom.
Posted 25/11/2009 at 6:27 PM | Alert an Editor | Link to comment
Walt from PEI writes: Every time Wessey opens his mouth lately he seems to be spinning something, Property Tax, Deficit, Red Shores. Kinda makes me wanna puke.
Posted 25/11/2009 at 8:25 PM | Alert an Editor | Link to comment
bobislander from pei writes: I think the problem is that some articles make it sound like you will be taxed on market value, i.e. what you pay for your home. I know I certainly paid a hell of a lot more than the assessed value.
Posted 25/11/2009 at 8:42 PM | Alert an Editor | Link to comment
Allan from PEI writes: I cannot believe this! I was so happy to see the Tories get the boot, but now I hope the same fate awaits these IDOITS!
Posted 25/11/2009 at 8:56 PM | Alert an Editor | Link to comment
Allan King from PEI writes: Everyone is entitled to be stupid, but some abuse the privilege.
Posted 25/11/2009 at 9:09 PM | Alert an Editor | Link to comment
Skewed Picture I think from PEI writes: I truly don't see the big rise in taxes here re: house sales.

Currently the price of a home is based on assessment value which is never what it should be (always lower). Nobody sets their sale price on the assessment value! Now it will be based on Market Value which is much closer or spot on re: the true value of the property.

The Seller always asks more anyway Buffer they never expect they'll get it. Anywhere from $7 to $10 thou is a normal buffer. What changes with having house value based on the Market Price? Nothing. Seller will still get his price or darn close to it. Both are happy. The taxes at 4% aren't going to be nearly as earth shattering as portrayed!

When or if the Seller decides to buy another house it's the same deal! Our Property taxes are capped at 5% but they dont' expect they'll ever be 5%. Our taxes have gone up more than that now in the past six years and commercial property more!

The Government could have just said we're raising taxes 5% ! Everyone would still be up in arms! This way they may only raise by 2 or 3 %

I'm not a Liberal Fan by any means but I do think the Tory's are off the page on this one!

I watched the Sitting today and listened to Jim on the property tax increase! Sorry Jim but I had to change the station! I really couldn't take anymore! Your performance today certainly didn't win any positives for yourself or your party.
Posted 25/11/2009 at 10:04 PM | Alert an Editor | Link to comment
Prime Time from Charlottetown, PE writes: Funny how with every announcement by the government some old Tory comes bolting out of the basement, pretending to be an irate Lib, and yelling that they're not going to vote Liberal as long as they live. Oooh, we're so scared....

As for this measure, get real, folks. You pay a fair price for a house, so you should pay a fair price in taxes. End of story. If you can't afford the taxes, don't buy the house. Why anyone would think they could have the old (lower) taxes and the new (higher priced) house is beyond me.
Posted 25/11/2009 at 11:00 PM | Alert an Editor | Link to comment
Reasonable from PEI writes: New homeowners are not going to pay any more property taxes than they otherwise would have under the old assessment process. The market value which they talk about is the value assessed by the Treasury using their formulas - which is what your property tax used to be based on. Under the new system, the market value will continue to be calculated each year in the same way, but your assessment value which will be the value you pay property tax on, will only increase by CPI. When someone buys the home, their assessment value will initially be the market value (not the selling price) which has been calculated over the years, and considering this market value under the old system, would be the value which the seller would have been paying property taxes on, new homebuyers are not paying any more taxes - its that home sellers are paying less taxes.

Confusion is created when the Treasury's Market value is confused with the actual market value or selling price.

Perhaps the real estate experts protesting may wish to take some time to study an issue before making publicized comments.
Posted 25/11/2009 at 11:00 PM | Alert an Editor | Link to comment
TA from pei writes: It always amazes me when we scream about paying our fair share of taxes yet we want everything to stay the same. Don't close our schools, don't close our hospitals, support the fishers and farmers with our tax dollars, give me give me. Where the h8ll is the money supposed to come from?
Posted 26/11/2009 at 10:48 AM | Alert an Editor | Link to comment
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