Halifax council Tuesday agreed to a “budget framework”—a set of principles meant to guide discussion through the early April debate leading to adoption of next year’s city budget—that sees no increase in the average residential tax bill. The framework lets councillors in this election year claim they are not raising taxes, but the reality is somewhat more complex.
Council agreed to increase the rates of transit taxes by a total of 0.7 cents—that’s a 0.5 cent increase in the “local” rate charged to all homeowners who live within one kilometre of a bus line and a 0.2 cent increase in the general transit tax charged to all residents of HRM except for those living in the far-flung Eastern Shore district. Combined, the increases in transit taxes raise an additional $10 million, which will be used to fund wage increases of $6.4 million and operation of new buses being added to the system.
The increase in transit taxes will be offset by a decrease in the general residential tax rate of 4.8 cents. This year, the average residential tax is $1,667, and with the changes, next year’s average tax will also be $1,667.
How is it that the average tax remains same and yet the city raises an additional $10 million? Through an expansion in the housing pool; new houses constructed will increase total tax revenue. Although averages remain the same, the exact tax experience for homeowners will vary greatly—with rural properties not near a bus line seeing a decrease, while urban residents near bus lines go up, and other complications entering the calculation.
On the commercial side, the tax rate will decrease by13.7 cents, or 4.2 percent. But as assessments are up on average 5.4 percent across HRM, the average increase will be slightly more than one percent. Like with residential properties, the exact experience with commercial properties will vary greatly, with larger increases in areas like downtown Halifax, where assessments are increasing rapidly.
This article appears in Feb 23-29, 2012.