HRM council debated the “tax reform” proposal for nearly three hours January 26 before defeating it on a 13-10 vote. But, in a widely circulated email sent out after the vote (on the web, here), Malcolm Fraser, chair of the political group Citizens for Halifax, says it’s a “fact” that “40 percent of the recorded comments by councilors on the matter were factually wrong.”
I was at the meeting, and followed the debate closely, but I have no idea how anyone could have tallied the number of comments made by councillors, much less make an assessment of their factual validity—more likely, the figures were pulled out of someone’s ass. But, thinking that Fraser could provide details for his claim and lay out his evidence for all to see and independently evaluate, I called him Monday and asked for proof for his figures.
“That [40 percent figure] was provided by an insider,” he explained, but declined to give the name of the “insider.”
Tuesday night, though, councillor Tim Outhit told me “the actual figure is 38 percent,” and that supposed exacting calculation was made by “senior staff.”
Think about this. Our governmental system is designed such that council makes political and policy decisions, and staff implements those decisions. But, evidently, staff has taken it upon themselves to, first, make political judgements about council’s decisions, second, compile reports essentially calling councillors liars and, third, share that “insider” information not with the public generally, but only with political groups on one side of the equation.
It’s a clear case of staff insubordination. But that insubordination, and Fraser’s email, are part of the predictable response to the killing of “tax reform,” and echoes sentiments expressed in two unsigned Chronicle-Herald editorials and two Marilla Stephenson columns in the same paper.
Let’s deconstruct some of those responses.
First, understand that the backlash comes from people who stood to land significant financial gains from “tax reform.” Taxes on Fraser’s $348,600 home, for example, would’ve been reduced by perhaps $1,500 annually. Marilla Stephenson owns, for the moment (more on this presently), a house in Wedgewood that is assessed at just over $400,000; she would have seen her annual property bill reduced by about $2,000 under “tax reform.” I have no idea who the “senior staff” at City Hall is, but taxes on both Chief Administrative Officer Dan English’s $299,700 house and “tax reform” guru Bruce Fisher’s $286,800 house would’ve also been cut, oh, a thousand to 1500 bucks annually. A decade or two out, we’re talking real money—enough to put a couple of kids through school, or to buy a nice sailboat, maybe even put the down-payment on a second or third house.
I can hear the denials now: “Oh, we wouldn’t support something just because our personal taxes would go down.” And sure, I doubt that anyone set out to directly conspire to reduce their own taxes. That’s not how it works. Rather, when you and your social group find that by happy circumstance you’d save a hell of a lot of money with “tax reform,” suddenly the proposal looks very promising, and oh so logical. Were it to go the other way– were taxes to be increased on the high-end properties you and your buddies own– there’d be an equal realization that the proposal was preposterous and down-right irresponsible, really.
It’s called “class bias,” and the reactions to the “tax reform” proposal reveal it in spades. We have a situation now where many of the well-heeled– the mucky mucks at the Chamber of Commerce, the right-leaning business groups, the “senior staff” at City Hall, the married-to-a-mucky muck-at-the-chamber columnist, etc– think it’s a perfectly swell idea to raise the taxes on tens of thousands of below-median priced homes and cut taxes on above-median priced homes.
Again, I hear the protests: “home value has nothing to do with wealth!” That line was certainly thrown out at the council meeting on January 26, and at other council meetings. Like the “40 percent” falsehood figure, this claim is complete and utter bullshit.
When I’ve asked people making the “home value has nothing to do with wealth” to back up their claim, they refer back to the Tax Reform Committee report, which reads:
Very little information exists to evaluate the relationship between wealth or income and property
values. Few studies appear to have been done in this area. However, every five years, Statistics
Canada conducts a census of Canadian residents asking a variety of demographic, social and
economic questions. One in five households are asked about their household income and (for
homeowners) the value of their home. Staff assisting the Tax Reform Committee have obtained
special customized data from Statscan showing this relationship between income and home values.This analysis was first undertaken with data from the 2001 census. A Regression Analysis was run
on the data and a Correlation Coefficient and a Coefficient of Determination or r-squared was
calculated. A r-squared is expressed as a number between 0% and 100%. Zero shows no correlation
while 100% shows a perfect correlation. In the case of the 2001 census data the value of a weighted
analysis of table occurrences showed only a 27% r-squared. This shows that the value of one’s
home is not a good predictor of one’s income. In other words, there is not a significant
relationship between income and home value.
[first emphasis added, second emphasis in original]
See what they did there, in just two paragraphs? They started with the a statement that included wealth, but ended up speaking of only income.
It is true that home value and income are not perfectly aligned, but income and wealth are two very different things. In our society, most people’s wealth is almost entirely tied up in their houses.
In fact, home-ownership has long been a sensible strategy for wealth collection. People decide to buy houses for many reasons, but young families often choose to spend a more-than-average portion of their income on to buy a house, precisely because doing so is a good route to building future wealth.
Of course income and property values don’t align– it depends on what stage in a home owner’s life you’re looking at: young home owners will typically spend a relatively high percentage of their income on a home purchase (and the resulting taxes); as they age and presumably get raises and more rewarding careers, those home costs become a smaller percentage of their income; and after their retirement, their income once again drops, and so the housing costs again are a relatively large percentage of their income. (Property value-to-income ratios will roughly track these changes as well.)
We’ve got lots and lots of home owners at varying stages in their lives, so it’s no surprise that we don’t see a strong correlation between income and house values.
But because the home is the primary source of wealth, home values are a pretty good reflection of wealth— not perfect, but far better than any other wealth tax we have in Canada. You can talk about r-squared values til you’re blue in the face, and the mumbo jumbo evidently fools a lot of people, but it has nothing to do with the correlation between wealth and home value.
I realize that not everyone fits into the typical home ownership mold. It’s unfortunate, but life circumstances–death of an income-earning spouse, loss of a job, medical emergency, etc.– sometimes cause people to lose their homes.
Marilla Stephenson, for example, is presently trying to keep her house. Due to a poor business decision on the part of her husband and a court judgement, she might soon find the bank repossessing her house. Stephenson has appealed the court ruling, and the court will soon make a ruling; if the court rules against her, she’ll have to come up with $100,000 or so to keep her house, an unlikely scenario.
Councillor Gloria McCluskey holds this against Stephenson. “Who is she to tell us how to run our finances when she can’t keep her own house in order?” McCluskey asks, rhetorically. But I’m not unsympathetic to Stephenson’s position– life sucks sometimes, and we go through ups and downs.
The government shouldn’t be cold-hearted about these life changes, and in fact the government isn’t cold-hearted about them. HRM has a worthy property tax deferral program:
The amount of tax deferred is a “lien” against the value of the property. The debt is collected if title to the property is transferred to another owner (such as in an estate settlement, a divorce, tax sale or if the property is re-possessed by a bank). The total amount deferred on a property cannot exceed 75% of the assessed value of the property.
In fact, according to Bruce Fisher, no one at all in the deferral program is anywhere near the 75 percent limit. In other words, that much-loved widow who has to sell her house in order to pay her property taxes is a compete fiction: she does not exist. Rather, the proponents of “tax reform” would have us increase taxes on modest homes so that the heirs of a house-wealthy widow will have a larger inheritance.
(I was speaking to my favourite bartender the other night, and he made the related point that the “protecting the widow” line is an argument for “lowering taxes on south end widows, and raising taxes on the retired guy in a trailer in Hubbards.” Smart bartender, that guy.)
Regardless, there’s enough flexibility built into our property tax collection system that sudden life changes don’t result in the loss of a house due solely to property taxes, and it’s dishonest to suggest otherwise.
Of course people will make bad decisions and buy beyond their means or, like Stephenson, get caught up in other unfortunate life changes, and those events might result in the loss of their homes. It’s sad, truly.
I’ve gone on for too long, so let me come back to where I started. I’ve laid out my arguments above, just as I’ve laid them out before. These arguments are, obviously, written, and anyone can dissect them, disagree, argue contrary-wise, put up competing claims. To the extent that I haven’t documented and made clear my arguments, I’ve failed.
But a great deal of the comments put up by the pro- side aren’t arguments at all. Like Fraser’s “40 percent factually wrong” comment, there’s no substantiation for them, no attempt to document them. How is it even possible to argue against something like that, other than to say it appears to have been pulled out of someone’s ass?
Or, the comments are ad hominem attacks, simply dissing, say, TIm Bousquet for writing for The Coast, and never mind his arguments, or faulting Gloria McCluskey, as the Chronicle-Herald did, for being the ” De-facto Mayor of Head-in-the-Sand Regional Municipality.” (So far as “tax reform” goes, the Chronicle-Herald has turned on its head the old truism that newspapers should comfort the afflicted and afflict the comfortable.)
The councillors who voted to kill “tax reform” did so because they saw that the process would necessarily result in an unjust tax system; there’s no “comprising,” no amount of “continued work” to somehow change that fact, and so their vote was a proper one, from their perspective.
That vote, though, was simply unacceptable to the elite of Halifax, and the elite is now firing back, throwing up any old bullshit, hoping that some of it sticks.
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“Tax Reform” proposal is dead
This article appears in Jan 28 – Feb 3, 2010.
My Dad recently made a comment about this whole process to the effect that no superficial analyses of the sort conducted so far, by both sides, are truly adequate. Not that he was espousing a more detailed approach, mind you, but what he suggested half-seriously that if *anyone* truly wants a “fair” system, we’d have to analyze dozens if not hundreds of factors, and go back decades into the historical record. For example, a complete accounting of all money spent when and where on what by government, population density studies by year, individual historical records of residential locations in the municipality to assess lifetime service impact by individual and family, family size records, car ownership histories…well, you get the idea.
I’ll concede the point that levying service fees by property value is unfair. But so is levying a flat fee, or nearly a flat fee, without an exhaustive analysis of the type my father suggested. I’d be prepared to bet that many of the folks on Chebucto who had a chunk of front yard removed by the city, all to satisfy folks consuming more expensive services in the hinterland, might well see their service fees go up under a flat fee proposal. For my part I’ve lived in downtown Dartmouth nearly all my life, and last I checked they haven’t built any new grade schools anywhere close, and road money is being spent on the suburbs to help move business out of the downtown core. The only serious road work down around here is on the main arterials to help shift people between downtown government day jobs or off the old bridge and subdivisions way out there. The list goes on. I suggest to anyone who thinks the current system is unfair that they are correct, but unless they are willing to really look at details any simplistic suggestion – like a flat tax – will also be unfair. And maybe they’d be better off leaving the current system as is, because if we did really dissect the matter to death they might not like the “fair” conclusions.
I live far, far away — in NW Oregon, but Tim really covers things beautifully and without b.s.
Love it!
What a crock from the staffers.
If there truly is a report showing these errors, release them.
To me, the staff members involved should be fired for gross insubordination.
And Outhit is showing himself to be a real pip of a teamplayer. I love his pounding of his chest, and oh by the way, did he mention “novaknowledge” again?
Oh, I’m sure he will…
Oh, and I forget to mention teh weight and gravity that a failed political group like Citizens for Halifax brings to the table.
A one-man band if there ever was one.
Bruce – that’s great that the HRM is now in the reverse-mortgage business…but the point remains that there are imbalances in the assessment system, why not investigate some of these instead of continuing with this myth that only the wealthy have a house “worth” $3-400,00.
No, the widow doesn’t have to sell the farm…but what she and her husband may have toiled their entire lives is in danger of an HRM fire-sale.
Oops, Tim, not Bruce…
The point being that no, the widow may not have to “sell her house”, but why should she now have to subsidize HRM at a higher rate, living on her own, than a family with 14 children, just because her house has increased in value over 40 years? And even if the “widow” is not forced to sell, skyrocketing property tax can severally affect someone on a fixed income, even $29,000.
I agree with Realist, there NEEDS to be ‘reform’…although not a straight fee-for service/flat tax, certainly not…Flat taxes and the like are nothing more than tax breaks for the wealthy disguised in the thin false moustache of “reform”.
But it would be nice to see some balance in your 100% support of the status quo…
There should be a formula that takes into consideration if a home is the ONLY one owned, and even how LONG it’s been owned, what it would be “worth” WITHOUT the big monster homes infiltrating the neighbourhood and driving rates up, etc.
And your bartender ain’t so smart after all…I grew up in Hubbards and good luck these days finding an affordable home there, especially near the cove, lol…and I don’t see many folks living in trailers…he must be thinking Sims Settlement!
So is there any actual proof that “senior staff” wrote a report, or is it just one Councillor (who voted for the losing side on tax reform) saying they did? This article, which, frankly, is getting a little close to personal attacks, is entirely premised on the fact that there is such a report. I know most of the people involved with this very well on a professional basis and I find it extremely hard to believe they would do such a thing. I think this statement should have been questioned more closely before accepted as fact. After all, it is not unheard of for Councillors to blame staff when convenient, now is it?
I also doubt there is enough support inside City Hall for the Citizens for Halifax group that someone would share an “insider” report to be used in a press release – at least not at a staff level…
I would love to be a fly on the wall during next week’s in-camera.
I think Outhit has some ‘splaing to do!
We know that the current system is unfair, because there is no strong relationship between service consumption and property value. We also know that a flat services fee per household is equally unfair, for dozens of reasons. What would actually be fair is a fee based on a reasonably accurate estimate of *real* service consumption by household, based on quite a few metrics.
I suggest that the five or more years already spent by city staff on pushing forward a proposal that a high-school student could have come up with in a week might have more productively been spent gathering, analyzing and summarizing the data, based on quite a few metrics, to show actual service consumption by household, thereby allowing council and the public to debate what needs to be debated, which is how do you relate how much households pay in relation to what they consume in services. It’s precisely in the *debate* stage, where everyone is armed with sufficient facts, where we should discuss the soft social issues, such as income, and the ability to pay.
It’s in this latter stage where property value, for example, would enter into the equation. For example, we might have determined that Household A costs the city $2000 a year, and Household B costs the city $4000 a year. As a starting point we then conclude that this is what the two households owe. This would be hard fact. (If staff can’t work out numbers like this, to a reasonable approximation, they should be fired.) After Round 1 of public debate it might then transpire that we decide to adjust the payments based on ability to pay (I would myself support this, but my point is that *this* is a social decision). Having made such a decision, we enter Round 2 of public debate, which is a discussion of ability to pay. It’s in this late stage where factors like wealth, income and property value come into it – these factors should be completely ignored at earlier stages.
Personally I’d be inclined to leave property values completely out of any discussions. It doesn’t correlate strongly with income, and not much more with wealth. If we had decided to adjust payments by income (ability to pay), it seems like the appropriate metric here actually *is* the income. Maybe I’m being incredibly simple here. And rather than quibble about income, just make it the gross.
I believe there are major benefits to the approach I suggest. It isolates the hard facts – actual service costs – from the social parts of the debate.
Wow! Tim has stooped to yet another personal low. Did you really have to air Marilla’s dirty laundry to make a point about tax reform??
I read her column and there is no mention of you in it, positively or negatively. If you disagree with her opinion as a fellow opinion columnist, why don’t you just write what you disagree with? Instead you conduct this personal vicious attack that involves accessing her family’s court records and airing their troubles to the world.
You are possibly the only investigative journalist left in Halifax, Tim. It is most unfortunate that you decided to use that talent to publicly shame the family of a journalist you disagree with.
Realist in Dartmouth: The process you describe makes a lot of sense and would be one way council could have chosen to tackle tax reform. Instead, the public was ill served by a group of politicians who let their passions interfere with the process of good public governance.
The Tuesday meeting was meant to provide a platform for the kind of debate you mentioned. The 5 years of work up to date HAVE been spent collecting tons of data. That data resulted in a proposal that, while not perfect, was closer to the intended reform than the status quo.
A good council would take that proposal, then start debating and working on many of the points you mention, hopefully resulting in a modified proposal that everyone can agree on.
Unfortunately, the ‘I don’t like change’ group, lead by headmistress Cruella De Vil decided to completely ransack the process and throw the baby out with the bathwater. If they can’t get what they want, no one else should get anything either.
Council’s performance on tax reform and the recent decision on taxi zones have seriously amplified the disfunctionality of our municipal government and their inability to make decisions of any significance to the future of the city. Many of our councilors have been exposed as mere emergency responders posing as specialist doctors (and with their salaries to boot). They can patch up a wound and keep you alive long enough to get you to a hospital, but they can’t cure your disease.
Band-aid councilors need to go.
“headmistress Cruella De Vil”
Wow, what a stupid fuck you are.
You call Tim to task for pointing out the inability of one of the chief supporters of the reform to maintain her own home, and then you resort to name-calling.
The proposal was broken and as Tim said geared to the Elite of Halifax.
As you are an Elite-Wannabe, it is no surprise that you would use insults and an oh so clever wall of words to obscure the fact that the MAJORITY (see I have a CAPS LOCK too) of folks in HRM saw this for what it was; an attempt by Sue “The Millionaire’s Pal” to shove taxes down the throat of the middle-class.
“”It is most unfortunate that you decided to use that talent to publicly shame the family of a journalist you disagree with.””
Where’s the “shame” here being “put on” someone by Tim?
From what I can gather, a house was used as collateral for a loan guarentee, and the loan is in default…the parties involved tried juggling ownership to avoid their part of the agreement, and the court has disallowed this. Am I missing something?
IMO, there is FAR too much of this type of weasel-esque maneuvers amongst the moneyed elite. In fact, this should be front page news.
It does indeed reek of “dirty laundry”, but it’s not Tim who soiled it, is it?
And it’s funny to me to hear people who support “progressive” tax at the municipal level (like we have at the federal and provincial) referred to as the “I don’t like change” group ! Odd, isn’t it, how suddenly even the most staunch wealthy conservative can become so “progressive” when it comes to having their own tax “burden” reduced!
Alright folks… Until now, I have been a voyeur of sorts on this site. My personal solution to the problem is as follows:
Sort of a compromise… I don’t believe that the “wealthy/high income earners” as a whole, are looking to cut their property tax because most are trying to make themselves look more affluent than they actually are. Just a human nature fact.
Most WANT to “appear” as if they can afford more than they actually can so therefore are happy to have their property tax show high.
My solution is this: Almost a flat tax, but in relation to the location you are in. If you are in Fairview, for instance, you are likely in a similar financial situation as most of your neighbours, and a similar home and the area has the same general amenities and services. Therefore, you should ALL pay the same property tax. If you are in South End Halifax, same thing… Most of you are in a similiar financial situation and have the same amenities and services so pay the same property tax. In the “county”(HRM), Kingswood or Haliburton Hills, or Three Birches, or Fall River… then you pay for THAT PARTICULAR location, regardless of whether you have one bathroom or four!!!!
I think that works….
Some will go up, some down…but for the most part, you are paying for what you get in your particular neighbourhood, despite the value of your home.
Less expensive for HRM to maintain and not too many persons or families affected… Just the odd balls with the outrageously large home in a weird location getting a break or the odd poor unfortunate in a tar paper shack having an increase.
Emily, I see what you’re saying, but a flat tax in this fashion would be dangerous. People would flock to areas with a less tax rate, like a corporate headquarters looking for a better tax structure. It would require too much administration, I would think.
Issmat, you’re sounding a little hurt by the defeat of the tax reform. The taxi zoning issue isn’t really something that needs to brought up here, as the discussion is about the tax reform issue. This also brings up another point. I find your posturing quite tiresome. Perhaps you should leave your political aspirations out of this, and talk facts, not platitudes about how council is ineffectual.
Value based taxes aren’t great, but they’re much better than what was proposed. Unfortunately, I don’t have an answer as to what would be better. If I did, I’d be on council, not debasing them here.
I think this all comes down to the fact that peninsula is paying the cost for the failed HRM amalgamation. Why should people who live in the city core burden the costs of urban sprawl and subsidizing business parks that drive business away from downtown shops and stores. It makes me sick that councilors from the sticks, who can’t differentiate Almon Street from Atlantic St., are making decisions on where I chose to live. I say down with the HRM super city. Let Halifax be Halifax once again and let the boonies take care of themselves.
I think this all comes down to the fact that peninsula is paying the cost for the failed HRM amalgamation. Why should people who live in the city core burden the costs of urban sprawl and subsidizing business parks that drive money away from downtown shops and stores? It makes me sick that councilors from the sticks, who can’t differentiate Almon Street from Atlantic St., are making decisions on where I chose to live. I say down with the HRM super city. Let Halifax be Halifax once again and let the boonies take care of themselves.
Hey Thisislondon!
You know that those business parks, in fact, generate a massive tax base for the rest of the city, right?
So is that we want our city to become. An industrial park. “Hey everybody, get in your car and come out to Bayers lake, Land of No trees and half of a sidewalk!”. I would have thought that someone like yourself would sacrifice the large tax base of a business park for a vibrant city. I guess hypocrites come in all different types.
So is that we want our city to become. An industrial park. “Hey everybody, get in your car and come out to Bayers lake, Land of No trees and half of a sidewalk!”. I would have thought that someone like yourself would sacrifice the large tax base for a vibrant city. I guess hypocrites come in all different types
No, London, it is all about balance.
I live and work in the downtown and don’t even own a car. Those parks provide the cash to allow other parts of the city to run.
St. John Savage shoved this nightmare of a city down our throats, with lies about the cost savings, to try and help his government balance the books.
Question. Why was the Canso Causeway a provincal cost, and the bridges a municipal one?
London, the business parks don’t drive business away from the downtown core. They’re two entirely differing areas for one, and stores in the downtown core are entirely different than the ones in the BLIP or DC. If they effect anything, they effect the malls.
Business Parks generate very little taxes for the city. This was one of the issues that tax reform was going to address, on the business side of property taxes. I’ll try to explain it as I understood it from a presentation of municipal tax data done by a member of the tax reform committee.
Current property taxes for business parks (such as Bayer’s Lake) are virtually nil. A long time ago, the city/province sold these lands to corporations and large funds that are based in other provinces (mostly Ontario), with the incentive of low or no property tax to be paid because back then these areas were void of city services. The short sightedness of this decision resulted in large swaths of land given away for peanuts to well-endowed corporations that pay business taxes to their home province, not to Halifax.
The land owners then used the low property tax bill to entice big box stores (Futureshop, Walmart, etc.) to set up shop in the business park. These box stores provide a local economic benefit in the form of low-wage retail jobs, but they belong to corporations that are also based outside the province, so no tax from the profits of Futureshop in Halifax flows to the province or the city.
Even though the lands weren’t zoned for retail activity, the lure of immediate jobs trumped the inconvenience of planning for the future. So, big-box stores moved in with little protest from city council.
As retail activity grew in Bayer’s Lake, shoppers required well maintained roads, snow removal, side walks, bus routes, bathrooms, garbage disposal, and all the other municipal services commonly provided for areas of heavy activity. Therefore, the city was stuck having to provide these municipal services to an area that wasn’t originally intended for this much activity.
Unfortunately, the city already had an agreement with the land owners that prohibit the city from charging property taxes on the business park land to recover the cost of all the additional municipal services that are now being pumped to the area. So, instead of charging the corporation that owns the Bayer’s Lake land, the city makes up the deficit by increasing property taxes on other retailers and business properties in the city core.
To put the disparity in perspective, one member of the tax reform committee described the imbalance by pointing out that the amount of property tax paid by Jennifer’s of Nova Scotia on Spring Garden Road for the square footage it occupies is (roughly) equivalent to the property tax paid by Walmart for the entire square footage of their box store in Bayer’s Lake.
The undue burden of high property taxes in the city core is causing the hallowing out that people are crying about. Retailers and businesses are charged taxes up to their neck, and yet all the foot traffic is being diverted to low-tax-contributing business parks in Dartmouth Crossing and Bayer’s Lake. So, local businesses in the city core close shop, and streets like Barrington, Spring Garden, and Qunipool become simple traffic corridors.
Whether the downtown shop/restaurant decides to permanently close or move to one of these low-tax parks, the net result to the city is negative. The city continues to see further declines in the amount of tax revenue it collects. That $100 per square foot the city used to get from, say, the recently closed CD Plus on Barrington Street will become $0 if CD+ never opens again, or $50 if CD+ decides to reopen in Dartmouth Crossing.
To make up the drop in revenue, the city will again increase taxes on non-park retailers, and sprinkle some tax increases on residential properties near DC as well.
This unsustainable negative economic cycle is leading to a disastrous future for the city, but it seems to be in line with the vision outlined by Mayor Peter Kelly during his most recent election campaign. During a Mayoral debate moderated by Radio host Andrew Krystal, the Mayor indicated that he prefers to see HRM with no specific center of activity. If memory serves, I believe the term he used was “a collection of down towns”, one for each of the pre-amalgamated cities of Dartmouth, Bedford, Halifax, and Sackville.
Get rid of ‘the cap’ on assessments.
I signed up for it but it is a dumb idea that saves me over $300 a year in property taxes and exh year the savings increase. I get a better return than the TSE.
All of which misses the point, control spending.