EAST HANTS: A small group of residents in East Hants could be taking a huge financial hit when they get their tax bills this year.

During the first budget meeting to discuss the 2010-2011 Municipality of East Hants operating budget on Jan. 12, property assessments, relating specifically to the Cap Assessment Program (CAP), put in place by the province in an attempt to protect their property assessments from increasing market value, became a hot topic.

Even with the CAP program, which has not experienced an increase this year, some taxpayers in East Hants will see a big enough change in their assessments to see an overall increase across the municipality of 3.7 per cent for residential assessments.

Kim Ramsay, finance manager with the municipality, says their department was taken aback with the news.

“This sort of surprised us because we were told, and it is true, that the cap is at zero,” said Ramsay. “What that means is anyone’s home who qualifies for the CAP program has not seen an increase in their taxable assessments because they have been capped at a zero per cent increase. As soon as we saw 3.7 per cent, we sat up and took notice and thought, well how can that be?

“What we discovered through a great deal of analyses is that the lion’s share of that is either new homes that have been built and would not have been subject to CAP prior to this year and homes that are changing hands.”

For residents building and buying new homes, they will not have the CAP program to keep their taxes lower.

“When a home that is under the CAP program changes hands, the new owner is then taxed at the market value and in some cases that is significantly higher than what we would have seen under a cap assessment value,” Ramsay explained.

Director of Finance, Connie Nolan, says for these residents building and buying homes, there is a significant jump to be expected.

“It’s a deceiving number because it really is a minority of accounts, it’s the new homes, it’s ones that have sold or that have made improvements or ones where assessments that weren’t assessed before has been picked up,” she said. “To get a 3.7 per cent increase is very significant and it means that there are a minority of accounts out there that pick up a significant increased burden because of it. Where there is an increase it is very, very significant.

“Just in the past year, even though the CAP was at zero, assessments across Nova Scotia had an increase of seven to eight per cent. Even though we were in a recession we were still seeing market increases of seven and eight per cent. What that means is any home that’s sold will recover all of the CAP that was there in prior years and they have also added on the seven to eight per cent increase we’ve witnessed in the marketplace in the last year so for someone who’s bought a new home, the difference between the assessment they will have mirrored to what the previous owner saw is very significant.”

Nolan adds for some who have purchased a home, the difference between what the previous homeowner was paying in taxes and what they will pay in some cases will double.

Councillor Fred Bannister wants to see something done for the affected homeowners, although he realizes the municipality may have limited options.

“Knowing this problem is being created, where you have one neighbour on the street paying significantly more taxes than the rest of the neighbours, we’ve always tried to create procedures and policies around here that are fair to everybody, so shouldn’t we be looking at a solution going forward here?” he asked. “Shouldn’t we be looking at putting things in place now before we get two or three years down the road and we have a significant number of these, then what are we going to do?”

But, with the CAP program being an initiative put in place by the province, Nolan says their options are limited.

“Council can decide how to distribute tax burdens through minimum CAPs, area rates, there’s area rates based on equal charge per household and equal charge per property,” explained Nolan. “There are certain mechanisms in the act that helps you to distribute tax burden, but there is no mechanism under the act that lets you pick and choose accounts.”

She agrees the CAP program isn’t working well for some taxpayers in East Hants and would like to see the program abolished in the future.

“The push is on to get the provincial government to understand exactly what this capping program is doing,” she said. “I believe that it will stop economic development across Nova Scotia if this capping program remains in place, because for people who are buying or thinking about building a new home, their tax rate has to go up.”

That’s a statement Hants East NDP MLA and Minister of Natural Resources and Agriculture, John MacDonell, has mixed feelings on.

“People will only pay what their house is worth,” he said. “I don’t really understand how it would impact development.”

Councillor John MacDonald says he isn’t sure assessed value is the best way for the municipality to tax for everything and thinks some services should be looked at for a per dwelling charge to make things more fair.

“A streetlight is no more valuable at a house assessed at $270,000 than a house three houses down at $180,000,” he said. “That streetlight is no more valuable to me than it is to them. I think we also have to look at how sewer is charged. Sewer isn’t assessed value, a million-dollar home doesn’t necessarily mean you put more of a burden on the sewer system but we put more value on it because of assessments because that’s what we’ve always done.

“I think it’s time we look at some drastic changes on how we decide what the tax burden is.”

But, making major changes could drastically change taxes for everyone within the municipality and Councillor Keith Rhyno says there will have to be a lot of consideration should they make the changes.

“We all have to bear in mind that if we head to a different way of how we tax, we have to look at and be very conscience of people with low incomes, our seniors, and our everyday working people,” he said. “Somebody else is going to pick up the difference for that and I think that we have to be careful.”

The issue is expected to be discussed further as budget meetings continue in the coming weeks.

acameron@enfieldweeklypress.com