Saint John hamstrung by provincial tax rules, report says
Report to Saint John council claims there is little wiggle room for property tax changes
A report commissioned by Saint John council shows the city's industrial properties may enjoy much lower property tax assessments than similar properties in other Canadian cities, but there's not much the municipal government can do about it.
"There is not much that Saint John can do on its own to improve the fairness and equity of the property tax because property tax policy is governed by provincial legislation," concludes the report which was jointly written by Ontario academics Harry Kitchen and Enid Slack.
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The two were hired last winter to look at the overall "fairness" of property taxes in Saint John but found little wiggle room for city hall to shift the property tax burden around even if it wanted to.
For the last two years a number of Saint John city councillors including Gerry Lowe, Shirley McAlary and Donna Reardon, have been questioning why the city brings in less tax revenue from its large industries than other Canadian cities seem to.
This year the oil refinery in Regina, Sask., paid more property taxes than the Irving Oil refinery in Saint John, even though it's less than half the size.
The report says New Brunswick, like Ontario, exempts most "machinery and equipment" from property tax, while other provinces like Newfoundland and Labrador, Quebec, Saskatchewan, Alberta and British Columbia do not.
And because an oil refinery is mostly machinery and equipment, the exemption has a major effect on tax revenue.
In Regina its oil refinery was assessed for taxes this year to be worth $290.3 million, while in Saint John the Irving refinery, which is more than 100 per cent larger, was assessed to be worth $98.6 million.
Although many Canadian cities can get around a low assessment by setting a higher tax rate for an industry like oil refining, New Brunswick does not allow municipalities that flexibility.
New Brunswick cites are only permitted to set a residential tax rate. Then by provincial law, commercial and industrial rates are automatically set 50 per cent higher.
According to the report, Canadian cities with big industries including Sarnia and Sudbury, Ont., Prince George, B.C. and Strathcona County, Alta., charge tax rates between 98 and 502 per cent higher on some properties than others — an option not available in New Brunswick.
The only solution
The only way for a city like Saint John to raise taxes on an industry it feels is under-assessed, is to raise them on every property owner at the same time.
Kitchen and Slack say much higher growth rates in the low tax bedroom communities around Saint John in recent years, suggest the city cannot raise its base residential property tax rate any further without losing more people to suburbs.
With no room to raise taxes generally on all property owners and no direct way to raise taxes just on one or two industries, Kitchen and Slack say the city should look to raise revenue through user fees like garbage collection and push the province for changes in property tax laws.
The report is scheduled to be presented to council on Monday evening.