N.B. proposed tax reforms still unfair, municipalities say

Union of Municipalities says province’s proposed property tax reforms are falling short.

UMNB president Brittany Merrifield said the reforms presented by the provincial government miss key issues.

“Fairness was not addressed through this reform. It hasn’t addressed the impact of tax fairness on the same street, in the same neighbourhood, in the same community,” said Merrifield, who is also the mayor of Grand Bay-Westfield. “Those are growing inequities that were created by the spike protection mechanism.”

Other issues the government missed, according to Merrifield, include the decoupling of residential rates from non-residential and industrial rates, limiting local tax exemptions, transferring industry tax to municipalities faster, and ensuring revenue from the 0.411 road levy is allocated to rural road maintenance.

The proposed reforms were presented Wednesday during a legislative session by Local Government Minister Aaron Kennedy, who tabled a bill that would change the property tax formula, tying tax rates to municipal service needs instead of property assessments.

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The new formula would calculate the tax rate for each municipality, which the government would post alongside property tax assessments.

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

Merrifield said municipalities are already the most transparent, accountable and fiscally responsible order of government. She said the government’s proposed changes will only put more pressure on municipalities.

“There’s been a heavy provincial hand on the wheel, and local governments are going to continue to have limited flexibility to meet the needs of our communities,” she said. “It also reduces municipal autonomy by creating another level of bureaucracy.”

The reforms would also increase the local non-residential and heavy industry rate multiplier range, enhance the property tax allowance program, and introduce a new funding grant for local governments with heavy industry property, which the province estimates will be ready by 2028.

Merrifield said not everything is negative. She said the union is pleased to see work being done to help municipalities receive industry tax revenue.

Another element Merrifield said is positive is the creation of a vacant land levy, which she said will be a useful tool for municipalities to increase residential density in targeted areas.

However, the union is urging the government to enact a second phase to address challenges that affect fairness for property taxpayers.

Merrifield said that without more flexible fiscal tools, municipalities cannot set tax rates that are more appropriate for taxpayers like property owners and small businesses.

“So, they are forced to shoulder an increasingly unfair proportion of the tax burden. That is not tax fairness,” she said.