The Gammie Report 5


The Craig Gammie Commentary

Volume 1 Number 5

9 April 2011

 Some reports say there will be no increase in TSBP municipal taxes this year;  others say taxes are increasing 8 per cent.  So what’s the truth? 

In a 29 March 2011 budget meeting a memo titled “Review of Key Tax Elements” was distributed by MFS Tracey Neifer to council members.

 That memo “ 2011 04 01 Memo to Council Tax Information.pdf”  is attached to the e-mail that brought you this newsletter.

 Two lines of information from that memo, one line for “% Tax Rate Increase” for 2007 to 2011, the other for “Average Household Municipal Taxes”, are reproduced below:

Table 1 2007 2008 2009 2010 2011
% Tax Rate Increase 0.00% 5.10% -4.50% 2.00% 0.00%
Average Household 973.16 1023.04 976.87 996.4 996.4
* Based on $180,000          
* Municipal Taxes          

 These two lines of data, alone or together, have been used to “show” that there is no increase in taxes for 2011.

 The first line, in fact, does not demonstrate “no increase in taxes”.

 It is true that TSBP staff have developed a budget based on zero “Tax Rate Increase”.  But tax rate increase is not the same as tax bill increase.   The actual tax bill increase for each of the 5 years is shown in table 2 below, along with the tax rate increase from the table above for comparison.  Actual tax bills for the average property are also shown:

Table 2 2007 2008 2009 2010 2011
% Tax Rate Increase 0.00% 5.10% -4.50% 2.00% 0.00%
Tax bill increase on average property 0.40% 6.17% 3.33% 9.72% 7.16%
Tax bill average property $ 828 879 909 997 1,068

 The data in table 2 show how the tax bill increase on the average property is not the same as the tax rate increase.  The tax rate increase really is zero for 2011.  But the tax rate increase is completely irrelevant.  What counts is the tax bill increase for 2011.  And if the budget is not fixed that’s going to be 7.2 % on the average property.  (In an earlier commentary I said the tax bill was going up by 8%.  This was based on an estimate of overall assessment.  I now have better figures for overall assessment.  The 7.2% figure is correct.)

 The “tax rate increase” information in the memo to council is not wrong.  It has just been misinterpreted by some as the “tax bill increase”.

 The line in the memo “Average Household” with the two notes “* Based on $180,000”

and “* Municipal Taxes” is more problematic.  The line is actually false.

 The line in the memo suggests that “Municipal Taxes” on the “Average Household” were $ 996.40 in 2010 and are $ 996.40 for 2011.  The line in the memo is clearly saying that tax bills on the average household are not going up in 2011.

But this is incorrect.  The data presented is actually taxes not on the “Average Household”, but rather on a house assessed at $180,000.  The calculation assumes that the assessment on the average house does not change.  This assumption is clearly false. This makes the information incorrect.

 In table 3 below I have included the incorrect data line, and also, for comparison, the real municipal taxes on the average property (I don’t have data yet on the average household), and also the tax bill increases over the years on the average property.

Table 3 2007 2008 2009 2010 2011
Municipal tax on $180000 of assessment (in error called tax on Average Household) 973.16 1,023.04 976.87 996.4 996.4
Tax bill average property $ 828 879 909 997 1068
Tax bill increase on average property 0.40% 6.17% 3.33% 9.72% 7.16%

I do not mean to suggest that the misrepresentation was intentional.  This municipal finance stuff is tricky to communicate, and I believe that in spite of the best intentions, the communication just came out a bit misleading.

 But the bottom line is that we’re heading for a 7.2% tax bill increase on the average property.

 The series of tax bill increases over the last 5 years is telling (table 3).  The tax bill for the average property increased 9.7 per cent in 2010. Tax bills have increase 29% in the last five years.   This is in my view unwarranted and unacceptable.

 What we need to do is get tax bills down to the 2009 level, or lower.  This means we need to reduce tax bills and the tax levy by the amount of last year’s tax increase, meaning we need to reduce taxes by 9.7% in 2011.   I recommend against using change in “tax rate” as a metric, but for those of you who insist on using it, my recommended 9.7 per cent tax bill reduction will require a 16.9 per cent reduction in tax rate.

 MPAC assessments have absolutely no bearing on the total tax levy, and have absolutely no bearing on the tax bill on the average property, and have no bearing on the amount of the increase in taxes on the average property.   MPAC assessments only influence whether you are at, above, or below the average tax bill.

 There is plenty of room in the draft budget to keep tax bills on the average property at the 2010 level.   To get to the 2010 level, the grants to the chambers and all the other money spent subsidizing the tourism industry should be cut from the draft budget.

 Getting to a 9.7 % reduction in tax bills will be a bit more of a challenge, but in my view it is both necessary and doable.

 And just to complicate things, there is another aspect of the budget, beyond tax bills, that is necessary to watch to know the true burden of the budget on taxpayers.  That aspect is changes to the Town’s balance sheet.   At this point I do not know if that aspect makes the current budget a bigger burden than implied by the 7.2 per cent tax bill increase, or a lesser burden.  I plan to put something on this in a future commentary.

 2011 04 01 Memo to Council Tax Information

Craig

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6 thoughts on “The Gammie Report 5

  1. amartiannamedsmith says:

    “Nothing in the world is more dangerous than sincere ignorance and conscientious stupidity.”
    Martin Luther King Jr.

    Mr Gammie sees the world through a filter lens of his own manufacture. His interpretation of events is mindful not of those who say: things are not as they seem, but of those who say: things are not as I wish them to be.
    A person of the latter type is incapable of seeing reason because it conflicts with his worldview.
    “To be ignorant of one’s ignorance is the malady of the ignorant”
    Amos Bronson Alcott

    He is entitled to his opinion but when he makes statements that are patently false and misleading I am offended and have been moved to offer truth in defense. As this could turn out to be a full time occupation and, unlike Mr. Gammie I actually have a life, I shall refrain from reading his opinions and offering respnses to them.

    I leave you with this: “There is one kind of robber whom the law does not strike at, and who steals what is most precious to men: time”
    Napoloeon Bonaparte.

    the Martian

    • streetview57 says:

      Indeed, the old “I can prove that everything you say is a lie, but I won’t bother to, because I have better things to do.”

      Here, let me play, too.

      Martian, I can prove that everything you say is a lie, but I won’t because I have a life.

      I posted last, so I win.

      cheers,

      • amartiannamedsmith says:

        57
        Everyone has a life, I am merley choosing not to waste another minute of mine on a situation that I consider akin to treading water in a bottomless pit! That Mr. G. views the world as he does and comes to the strange conclusions he does is something for people who read what he writes to deal with. If he chooses to back up his position with falsehoods or accuse people of misdeeds without the correct information – not my problem – find out for yourselves!

        I would remind you that there were not enough people who agreed with his views to get him elected!

        Play if you wish 57,but you’ll find, as I did, that it feels much better when you stop. You have an old saying…something about brick walls and banging heads……

        “I posted last, so I win.”
        Looks like your worldview is also a little skewed but knowing you, that’s nothing new!

        the Martian

    • jillyblack says:

      ……God is dead…Niestche… Niestche is dead…God……………………………….The Martian speaks truth….Long may you run..

      words he say’s are true, we’ should

      • amartiannamedsmith says:

        Fred isn’t dead – he just moved off planet!

        Thus Spoke Zarathustra!

        the Martian

      • mxyzptlkimp says:

        “Long may you run.”???
        Keep on searchin for a Heart of Gold jilly.

        pmikltpzyxm I’m gone

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