Saint John pushes back on proposed tax changes, citing revenue concerns

The province’s proposed property tax reforms will create more challenges for Saint John, says Mayor Donna Reardon.

Reardon said while the province’s proposed changes introduce more flexible tax rules, the government’s suggested rate will put pressure on the municipality.

“It isn’t what I hoped for, that’s for sure,” she said. “And I’m grateful for the multiplier change, but if I can’t use it, then that’s no good.”

Local Government Minister Aaron Kennedy unveiled the province’s plan to overhaul the property tax system at a legislative session on May 27.

The initiative is intended to make the property tax system in the province fairer, more stable and more transparent, following significant increases in property tax bills driven by rising property assessment values.

Under the proposed changes, Kennedy introduced a new formula for calculating property taxes in New Brunswick that would tie tax rates to municipal service costs rather than assessments.

The government also increased the local non-residential and heavy industry rate multiplier range — from 1.4–1.7 to one–two — to compensate for the decrease in the base tax rate and to help balance revenue for local governments.

The multiplier is a sliding scale that municipalities can use to set the non-residential and industry tax rate one or two times higher than the residential tax rate.

Under this formula, a suggested tax rate will be calculated for each municipality, which the province will publish along with property assessments.

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According to Kennedy, municipalities can choose a different rate if they need more revenue, but they would have to explain their reasoning on residents’ property tax bills.

However, Reardon believes the government’s new formula will not fully reflect Saint John’s unique circumstances.

Saint John has one of the highest municipal residential property tax rates among major cities in New Brunswick, at $1.53 per $100 of assessed property value.

She said housing values have risen much faster than those of businesses and government properties in recent years, creating an unequal property tax distribution that affects homeowners and apartment owners more.

In the past five years, housing values in Saint John have increased by 39 per cent, while non-residential and industrial assessments have risen by only eight per cent.

Reardon said the municipality has reduced the property tax rate by 25 cents over the past five years to ease the burden.

However, because of the Real Property Tax Act — which prevents municipalities from lowering taxes for just one class by legally linking residential and non-residential rates — Reardon said the city has not been able to further reduce taxes in a way that would better balance the burden for homeowners and apartment owners.

Additionally, despite the multiplier allowing for more flexibility, Reardon said Saint John needs to remain competitive to attract business.

She said the municipality wanted the rates decoupled to gain more autonomy in setting property taxes for residential taxpayers in a fairer way, but with the government’s proposed formula, she feels municipalities are being given more restrictions.

“What I’m looking for from the province is more autonomy. I’m not looking for more harnesses, more keeping municipalities down, more tearing municipalities apart, more weakening municipalities,” she said. “I’m looking for the province to be my ally and to strengthen municipalities.”

Reardon said she is concerned that the government’s proposed stabilizer, if set too low by the province, could hinder the municipality’s ability to fund essential services such as road repairs and traffic calming.

She added the municipality has finally achieved a balanced budget, and further reducing the tax rate under a stabilizer would not be sustainable for the city.

“If we reduce one cent, we’ll have a differential of about $1 million,” she said.

Reardon also questioned the province’s suggestion that municipalities need to justify their spending and tax rates to residents, saying this is already done through a transparent budgeting process.

She said the government’s approach was patronizing and done without proper consultation with municipalities.

“For the province to come out and say this sort of thing — that suggests we’re irresponsible, that we’ll have to justify our spending, that they know better than we do because they’re going to set our stabilizer — it’s insulting,” she said.

Reardon questions province’s industrial tax grant

To reduce the tax burden on homeowners and apartment owners, Reardon said the municipality has been advocating for the province to allow Saint John to retain more industrial tax revenue, as it has the most industry in the province.

According to Reardon, high housing assessments mean residential taxpayers are effectively subsidizing industry in the city.

She said that because municipalities bear the impacts of industry — such as noise, dust, fire risk and traffic disruptions — it is only fair that cities keep more of the tax revenue generated and reinvest it in infrastructure and services.

As part of the proposed changes, the government said it is working on an industrial tax return for municipalities, but the program is not expected to be ready until 2028.

Reardon said she is concerned that because 2028 marks the end of the current government’s term, the grant may not materialize.

During a May 27 news conference, Kennedy assured reporters the province remains committed to delivering the industrial tax grant.

“We are very pleased that we are able to move forward on that, and we are not abandoning the heavy industry revenue grant,” he said.

However, Reardon said she would like more details on how the revenue grant would work, as well as clearer information on how high a priority it is for the province.

For now, Reardon said she will continue to advocate for the industry tax, and other changes she believes will better reflect Saint John needs.