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Enid Slack: Is the property tax system broken?

It seems there are always discussions around whether the property tax system is an effective tool for municipalities to raise revenues.

Enid Slack, Director of the Institute on Municipal Finance & Government, Munk School of Global Affairs and Public Policy, as well as an advisory panel member of the Municipal World Journal, is certainly a champion of the property tax – in particular, the market value assessment system – and shared as much during a presentation at the 2019 Association of Municipalities of Ontario conference in Ottawa.

Afterward, she sat down with sat down with Municipal World CEO Susan Gardner where they discussed that – despite its problems – market value assessment remains the best way to collect property tax revenues.

Fairness of Market Value Assessment

“If I’m in a house worth $200,000 and you’re in a house worth $200,000, we should be paying the same tax,” Slack said. “People look at their neighbours, and what their houses are worth, and make that comparison. So, not only is it fair, it’s perceived by people to be fair.”

There are alternatives, as Slack details in the video, such as area-based and self-assessed systems. But, they’re not necessarily fair, she explains. Slack also discussed the use of tax increment financing, a tool used largely in the U.S., noting that it can be particularly useful in helping to revitalize downtown areas.

Right Tool for the Right Job

Ultimately, Slack said property tax remains “a really good tax for local governments” as it provides a stable and predictable source of revenue. Also, it is a system closely related to the benefits people receive from local government services, making it a very visible tax.

However, she is quick to add the big challenge for municipalities today is the many services – with wildly different characteristics – that they must provide.

“You can look at the different characteristics of the services local governments provide, and different tools are appropriate for those different characteristics,” Slack said. “The issue is more what kinds of tools should be used for what kinds of services.”  MW

✯ Municipal World Insider and Executive Members: You can view Enid Slack’s presentation to the Association of Municipalities of Ontario on the Municipal World Journal website. You might also be interested in the James Wilson article: Five fiscal realities that frame council choices. Note that you can now access the complete collection of past articles (and more) from your membership dashboard.

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