Increased property taxes are good news says Treasurer Wes Sheridan photo: CBC

Taxes will rise with CPI or actual sale price of properties

Provincial Treasurer Wes Sheridan reinforced the old saw about nothing more sure than “death and taxes”.

Governments need to spend money. So they need taxes and property taxes are one of their favourites.

In May 2010 the Liberal 2-year property tax freeze is over and property taxes will rise with the CPI. Last year the CPI was negative as of September so the increase might be nil. The rate will be capped at 5% annually which seems high today but the future is uncertain.

Since 2002, the CPI has risen 18.6% on PEI.

The devil will be in the details. Is that CPI seasonally adjusted or not? What will the exact CPI base be since there are several versions of the CPI?

The interesting wrinkle is the gap between the CPI adjusted value for property taxes and the appraised value.

Property Tax bills will show both values – CPI adjusted and appraised. New buyers will be paying on the actual value, that is what they pay.

That can work in your favour if you negotiate a price below appraised value. It doesn’t take long for the appraisal to rise up to the norm for the area though so the benefit is short term at best.

“This is virtually a good news story right across the board where people can now see very transparently how their assessments are going to go up,” said Provincial Treasurer Wes Sheridan. CBC

John Ives, of the P.E.I. Real Estate Association, is not so happy with the changes. “It’s just going to come and hit the everyday person right in their pocketbook after they find the house that they want to buy,” said Ives. CBC

Jim Bagnall told the Guardian he doesn’t like the change. Whoever buys it is going to be hit with maybe twice the taxes that I’ve been hit with. They’re banking the taxes for the new owner.” Charlottetown Guardian

It may dawn on us that we are only renting our properties. Even with a paid mortgage, we must pay the annual fee (property tax) to remain tenants in our own homes. Since Kings could tax their citizens, it has always been that way and always will.

However, it does make taxpayers sit up an pay attention to how government wastes our tax dollars. Did you know the City of Charlottetown wasted $600,000 on flowers last year. Other more frugal cities allow citizens and businesses to exercise their civic pride and look after summer flowers at no cost.

There are many examples of waste in all levels of government. Unfortunately government waste is not coming from Ottawa as some suggest. It comes from the pockets of everyone on PEI since we must pay taxes to rent or own a home.

Both Guardian and CBC websites contain universal condemnation of the expected increase in taxes now and for new buyers.