Tuesday, April 12, 2016

Does A 0% Tax Increase = 0% Tax Increase??

Even with a 0% increase in the 'rate' of taxation
taxes can still rise based on 'assessed' value

City hall and this city council much to their credit are bringing in a budget that for the first time in memory does not have an increase in the rate of taxation built into it.

However, that does not necessarily mean you will not see your taxes increase if your assessment has increased from what it was last year.

This is a little complicated (I will try not to confuse myself), but the actual amount of tax that the city levies on your home is based on the assessed value and what used to be called the mill rate (now just tax rate). The mill rate is determined by deciding how much revenue is needed to run the city based on the assessed value of the properties to be taxed. That is an over simplification but is roughly how it works.

For example if the city needs to collect $1000 of taxes and the assessed value of the property they are taxing is $100,000.00. Then the rate of taxation would have to be 1%. $100,000.00 X 1% = $1000. Now if there is no increase in the % rate of taxation (a 0% increase this year) but the assessed value of the property is increased to $110,000.00 without increasing the rate of taxation (still 1%) the total tax collected would increase to $1100.00, That is a function of a 1% tax rate X $110,000.00 assessed value = $1100.00.

So, if the city and this council's intention is to not increase the amount of tax they are collecting this year compared with last year, and if the assessed rate has increased, they could/should in fact be lowering the rate of taxation.

While the 0% tax increase is all well and very good, don't overlook the 35% increase in water rates and the 25% increase in sewer rates over the next five years. But hey, those aren't taxes, those are fees!!



  1. Municipal funding is very complicated and difficult to figure out at times. I was trying to explain it to a friend today and even I was getting confused. Put simply, if every property has the same percentage increase or decrease in assessed value, there should be no changes in your taxes. So long as the budget doesn't increase. So really it comes down to budgeting and putting a budget together is one tough job in today's volatile economy.

  2. Yeah well I will wait for my tax bill before I can try to understand this stuff. It strikes me as being equal to asking a politician what the meaning of life is?
    Cliff Marcil

  3. Thanks to Nanaimo Info here, great job on the explaining. Many people try it but u've done very well.
    I like this, "Those aren't taxes, those are fees".
    very well said, Christy Crunch speaks similarly about BC Medical Plan, "Those aren't taxes, they are medical premiums" ??????
    Keep up the good work.


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