End the property tax prejudice

Granger residents are getting ripped off by the City of Whitehorse. That conclusion is hard to escape, anyhow, following a commentary by real estate lawyer Graham Lang published in last Friday's News.

Granger residents are getting ripped off by the City of Whitehorse.

That conclusion is hard to escape, anyhow, following a commentary by real estate lawyer Graham Lang published in last Friday’s News.

He crunched some numbers and concluded that the average home in Granger pays nearly $600 more in property tax than homes of equal market value in Riverdale or Porter Creek.

This imbalance is plainly unfair. After all, if we’re going to impose taxes for arbitrary reasons, why stop with Granger residents? We may as well charge a special tax on red-heads and cat owners while we’re at it.

The reasons for this wonkiness seems to lie in how properties are assessed in the Yukon. While the provinces have long used a variety of methods to determine the market value of a property for tax purposes, here in the Yukon, assessors base their calculations on murky formulas that try to determine the replacement cost of a home.

For reasons that remain unclear, this has resulted in assessment values rising out of tandem with market values in more recent neighbourhoods, like Granger.

Territorial officials defend the current system. They say their assessed values are accurate – and, by inference, that the market is wrong. Forgive us if we’re skeptical.

Lang reached this conclusion with a few calculations that anyone can follow. He looked at a sample of similarly priced homes in each neighbourhood, then compared the sale prices to the assessed values of the homes.

Assessors, meanwhile, reach their own numbers with some voodoo that nobody but them really understands. By similar methods, territorial officials are able to assign with a straight face “market values” to newly developed land, when in fact there is no market for land, as the city and territory control all development.

We’re not suggesting assessors are deliberately skewing prices. But this seems to be yet another case of the Yukon continuing to use an archaic set of hand-me-down rules we inherited from the provinces, long after other jurisdictions have updated their own laws.

In 1995, Alberta abandoned our system in favour of market values. Ontario made a similar switch in 1997. B.C. also looks at the market value of a home.

Both the territory and the City of Whitehorse seem to share some blame with this mess, as both levels of government contribute to the formula used to calculate property taxes: assessment rates are multiplied by the city’s mill rate to see how much tax is owed.

It’s the territory’s side of the equation that looks broken. But it’s the city that actually decides how to determine its taxes, and it’s this level of government that reaps the rewards.

City council should get the ball rolling by asking administration to try to verify Lang’s findings. If his conclusions do hold up, councillors should keep in mind that it usually takes a swift kick in the rump to get the territory to fix something, and put their boots to the cause.

Lang, being an unabashed right-winger, has a distinctly conservative solution, which bears a passing resemblance to Margaret Thatcher’s much-reviled poll tax. Homes that use similar services would pay similar rates, but pricier homes would not necessarily pay more.

Lang sees tying home values to municipal taxation as an ill-conceived method of redistributing wealth. Such efforts are best pursued by the territory, he reckons, which has access to reliable income data.

We’d frame things differently. As a matter of fairness, most residents have no problem with the wealthy paying a bigger share of the costs of snow clearing and keeping the Canada Games Centre’s lights on – indeed, that seems to be the arrangement for property taxes pretty much across Canada.

And let’s keep in mind that property taxes, even when pegged to the value of a home, are considered by economists to be regressive: poorer homeowners pay a larger share of their income than wealthier homeowners. Lang’s solution would only make this imbalance even more unfair.

It’s also important to note that fees for water, sewer and garbage delivery are already broken out as separate fees, set by usage and building type, rather than home value.

With all this in mind, moving our assessment system to market prices seems like a far safer solution.

A truly fair property tax arrangement would also see rural residents living near city limits paying similar taxes, but, as Lang has pointed out, that isn’t the case. Residents of Golden Horn and Marsh Lake pay half the property taxes of their neighbours in Wolf Creek and Mary Lake, thanks to the arbitrary distinction of which side of the city boundary these neighbourhoods fall on.

Lang’s solution to this problem makes sense: the territory and city should strike a deal in which these similar neighbourhoods pay similar property taxes, with the additional funds reverting to the city.

It remains to be seen whether our politicians have the guts to act.

After all, if Granger residents see their taxes drop by $600, other neighbourhoods will see taxes rise. And Golden Horn and Marsh Lake residents would not be pleased to see their property taxes double to match what’s paid by their neighbours.

Thankfully, the Yukon government has some self-interest at stake, at least when it comes to sparing Granger residents from being over-taxed.

Having to pay an arbitrary $600 surcharge each year is the sort of thing you remember during a territorial election. And, as it turns out, Granger voters make up a good chunk of the riding of Mountainview. That makes their MLA none other than Premier Darrell Pasloski.