Efforts to Cushion Property Tax Shifts Often Entrench Inequities

Canadian municipalities are using various tax mitigation tools such as assessment phase-in, tax rate adjustments, and capping or rebate programs to adjust property tax amounts, but these measures may lead to a pool of winners and losers, affecting transparency and equity in the tax system. An assessment phase-in system reduces transparency and artificially slows the growth of the assessment base, thus leading municipalities to increase the tax rate. Land assessment averaging also makes taxation less transparent, and reducing the total amount of taxable assessment increases the tax rate to compensate. Extreme shifts in market value or issues for vulnerable businesses can be addressed by applying different tax rates for various categories of property. New Brunswick municipalities may have short-lived property tax relief for commercial and industrial ratepayers.