Conservative Leader Olive Crane called on the province government to hold public hearings on proposed property tax changes. (CBC)

Proposed changes to property tax assessments sparked explosive debate in the P.E.I. legislature Wednesday.

Amendments to the Real Property Assessment Act were about to go to second reading when, in a rare move, Opposition Leader Olive Crane tried to get the bill taken off the floor.

Under the changes introduced Tuesday, property tax increases would be tied to the province's consumer price index.

And starting next year, property tax when a house is sold would be based on market value, which is often higher than assessed value and could mean a sharp increase in taxes for new homeowners.

Opposition members contend the bill, which follows a freeze on property taxes, is a huge tax grab and accused the Liberals of trying to ram the legislation through without debate or consultation.

Conservatives called on the government to hold public hearings, or to at least delete sections of the bill, a proposal that touched off a heated exchange of accusations across the House floor.

Critics argued the changes will raise taxes for every homeowner at a time of recession.

House prices increasing

Some real estate agents have also expressed concerns about what the changes will mean for homebuyers, who will be paying market value when house prices have been going up.

"This was a bit of a blind-side," said agent Joel Ives.

"No one in our industry, as far as we can tell in our real estate association, was made aware of these changes that are coming and we're not quite sure how we are to consult with people who are thinking of buying property at this point."

But provincial Treasurer Wes Sheridan said the difference between market value and assessed value is only about four per cent in most cases.

"Sometimes it will be higher, sometimes less, but this means Islanders are not going to see the huge seven or eight per cent increases they've seen in the past," he said.

The selling price of a house is only one of several factors used to calculate market value, Sheridan said.