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City of Saint John Presents to Standing Committee on Law Amendments


City of Saint John Mayor Don Darling and City Manager John Collin presented to the Standing Committee on Law Amendments with regards to Motion 31, dealing with property assessment & taxation of heavy industry, at the Legislative Assembly in Fredericton on Thursday afternoon. During the presentation, the City emphasized its readiness to work with the Provincial government on its comprehensive property tax review, and stressed the immediate need for a fairer and more equitable property tax system to support growth in Saint John. Six key recommendations were also offered for the Province’s consideration as part of its property tax review.  
On August 19, 2019, Saint John Common Council endorsed Sustaining Saint John – A Three-Part Plan. As an action item within the plan, the Provincial government committed to taking the lead on a “comprehensive review of the current local government property tax policy as well as any new property tax-related tools which would benefit local governments.” The City’s position on the need and urgency for a comprehensive property tax reform has been consistent over the term of the current Council and through the recent discussions and endorsement of the Three-Part Plan. The current model does not adequately address the financial needs of municipalities, whether urban centres or smaller towns and villages within the province and, as a result, falls short of enabling growth for Saint John and other municipalities. In its presentation to the Standing Committee, the City supported the Province in its commitment to pursue comprehensive municipal tax reform detailed in the Three-Part Plan.
While open to all benefits that could result from a successful property tax review, the City is particularly interested in reform that would redistribute existing property tax dollars – in other words, a more equitable approach to the amount kept by the Province and given back to the City. The Federation of Canadian Municipalities commissioned a report some years ago that showed that for every tax dollar collected in Canada, only 8 cents goes to the municipal level.  The remaining 92 cents are shared between provincial and federal governments. The margins are very tight for cities and, since nobody wants more tax, there must be a concerted effort to explore redistribution of tax that is already being collected.
During his concluding remarks to the Committee, Mayor Darling expressed the City’s concern with having more questions than answers about the fairness of current property tax assessments and exemptions, and asked members to reflect on the following:

1.    What is an appropriate definition for machinery and equipment?
2.    Does the Province have a sound policy on property tax exemptions? If so, this policy should be disclosed in an open, transparent and accessible location for the public.
3.    What are the Province’s policies on how and when industrial assessments are created and revised?
4.    Can the Province provide the most recent business case for all exemptions that have been put in place for economic or business purposes?
5.    What is the true value of the machinery and equipment exempted in the City of Saint John and across the Province of New Brunswick?
6.    Are there options to tax a portion of select machinery and equipment that would not remove the competitive edge required by industries but would also address the financial burdens experienced by host communities?

The City Manager wrapped up his remarks with additional recommendations the City would like the Province to consider as part of its comprehensive tax review include the following:
•    Reconsider and implement an initial first phase of property tax reform that redistributes heavy industry taxes back to the municipalities that bear the cost and the risk associated with that heavy industry.
•    As recommended by Kitchen & Slack, and the Finn Report, vacate property tax and leave it as the exclusive domain of taxation for municipalities.
•    Revisit all recommendations contained in the Finn Report.
•    Eliminate the practice of exempting properties and replace it with a policy that fully assesses all properties.  Exemptions would require a business case to support all tax breaks with clear criteria and that the tax reduction be in the form of a tax rate reduction and not in distortion of the assessment base. This would assure full transparency.
•    Review the policies and assessment practices for machinery and equipment, including the business case for any exclusion, and consider taxing a small portion of machinery and equipment.
•    Empower municipalities by enabling additional revenue streams and providing more diversified taxation authority, including the ability to establish and set their own classes of customers and property tax rates.
The City of Saint John recognizes that growth is the key to Saint John’s financial sustainability and success. It is also vital to the quality of life for residents, and the economic development of our region and province. Prosperous cities make for a prosperous province. Growth within Saint John and other municipalities within New Brunswick will be facilitated with a more fair and equitable municipal property tax system.
The 8 Cities of New Brunswick Association, Union of the Municipalities of New Brunswick and Association francophone des municipalités du N.-B. have all taken a public stance in their request of the Province to undertake property tax reforms in New Brunswick.
The City of Saint John is pleased to be part of the solution to municipal reforms and, in particular, property tax reform. Members of Common Council and senior City staff look forward to continuing discussions with all stakeholders as the much-needed property tax review gets underway.

View all supporting documentation, including the presentation and speaking notes. 

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