Time to overhaul our property tax system

Imagine if the City of Whitehorse passed a bylaw stating that all Granger residents had to pay 25 per cent more for apples than Riverdale residents.

Imagine if the City of Whitehorse passed a bylaw stating that all Granger residents had to pay 25 per cent more for apples than Riverdale residents. Such discrimination based on location would be unfair, and probably wouldn’t last.

Yet that’s pretty much how the city’s property tax system works.

Those lucky enough to live in Riverdale or Porter Creek pay considerably less property tax than those in similar homes in Granger. What’s more, residents of Golden Horn and Marsh Lake, who benefit from city infrastructure, pay a fraction of the tax of those residents within city limits.

It is high time we move to a system in which equal services demand equal taxation.

I’m not implying that property tax assessors are failing in their job. They are saddled with an arcane system that values residences based on the “estimated replacement cost” of a home, rather than on market value. This is a difficult calculation to make in the first place, and even harder to keep accurate over the passage of decades.

This system of assessment has led to a wide disparity in property tax bills between owners of similar types of property in similar types of neighbourhoods, and needs to be reviewed wholesale.

A quick perusal of the local real estate listings show two houses, one on Garnet in Granger and one on Alsek in Riverdale, listed for sale at $379,000. The home in Granger is assessed for taxation purposes at $207,000 while the home in Riverdale is assessed at $154,000.

This means the Granger resident pays $2,270 in property tax while the Riverdale home, though selling for the exact same price and with access to the exact same services, pays only $1,690. The home in Granger, receiving the same services as the home in Riverdale, pays almost $600 more in property taxes in a given year.

This is not an isolated case. A comparison of similarly priced listings between Granger and Riverdale/Porter Creek reveals that the Granger homes are typically assessed at higher rates.

Taking five random houses in Riverdale and Porter Creek listed for sale between $310,000 and $419,000 (averaging at $360,000), one sees that the Riverdale/Porter Creek assessments average out to $157,000, with an average property tax bill of $1,720.

Compare those numbers to five random houses from Granger for sale between $309,000 and $420,000 (averaging at $360,000) and one finds that the assessments average out to $211,000 with an average property tax bill of $2,315.

This means the average Granger resident pays approximately $600 (or 25 per cent) more on average in property tax than his or her neighbours in Riverdale and Porter Creek. The neighbourhoods receive the same level of service from the city, but by virtue of our current system Granger is forced to bear a larger share of the cost.

I won’t even get into the tax savings found downtown. It will just depress the good people of Granger and Copper Ridge.

Yet consider the real winners of this drama: the residents of Golden Horn and Marsh Lake.

These residents just outside of city limits pay half the property tax of their neighbours in Wolf Creek and Mary Lake. A house in Golden Horn which recently sold for $400,000 has a yearly property tax bill of $1,070.

A house of that value in Wolf Creek would pay, depending on assessment, approximately $2,000 to $2,300 in tax. The distance between the houses can be measured in feet, and the services they receive from the city are identical, yet one resident pays double the property tax of the other.

This is because the homes in Golden Horn and Marsh Lake fall on the good side of the city limit line and are under the Yukon government’s property tax regime, which levies considerably less tax due to a much lower mill rate.

We should adopt a fairer system, one based on services provided, rather than on the assessed value of homes and arbitrary lines.

I’d suggest that we replace the current “replacement value” regime with a fixed levy per-lot system, with different types of lots assigned differing fixed yearly rates..

For example, if one has a single-family residential lot connected to city utilities there would be a fixed amount, say $1,700, in property tax levied per year which would catch all homes in Riverdale, Downtown, Porter Creek and Granger. Those single family residents without city utilities, being Spruce Hill, Mary Lake, Sima and Wolf Creek, would pay another rate, say $1,400, hopefully generally closer to those rates paid in Golden Horn. An agreement between YTG and the city on that issue would be helpful in achieving fairness.

This method would not only equalize payments between similar neighbourhoods and similar types of lots. It would also move the city away from the game of wealth distribution, which is what the current system, at its heart, truly is.

The city requires that people with bigger houses pay more tax than those with smaller houses to access the same services. It is the equivalent of the federal government taxing your income based on the value your neighbour puts on your truck.

Let the Yukon government decide what wealth should be redistributed, as they have access to the income tax filings that allow them to accurately make those calculations. Let the city focus on ensuring those who receive the same services pay the same tax.

Graham Lang is a Whitehorse lawyer practising real estate and commercial law.