Sunday, February 06, 2011

Finance | Fredericton councillor has proposed same idea for capital

Fredericton's finance committee chairman isn't the only New Brunswick elected official saying it's time to consider scrapping two-tiered municipal tax systems.
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Miramichi city councillors are planning to phase in a citywide rate over two years.

The City of Miramichi, created in a 1995 amalgamation of two towns - Newcastle and Chatham - and the surrounding communities of Douglastown, Loggieville and Nelson, has had two different tax rates for 15 years.

For 2011, councillors have voted to tighten up the rate differential. Instead of paying five cents less on their taxes on the outside rate, residents of Miramichi will see that reduced to a 2.5 cent differential this year.

That means some residents will pay a tax rate of $1.71 per $100 of assessed property value, while others on the so-called outside rate will pay $1.69 per $100.

City treasurer Darlene O'Shea said there are all kinds of arguments that support eliminating the split tax rate.

All residents of Miramichi get access to services such as fire protection, policing, plowing and garbage collection whether they live in a part of the city that has water and sewer access or not.

Traditionally, the split rates in communities came into existence to recognize that some residents can connect to city water and sewer while others can't.

That was the rationale for a split tax rate when Fredericton amalgamated in 1973.

Some sections of Silverwood and Douglas and Lincoln still can't connect to water and sewer lines because the service extensions haven't been finished.

But O'Shea said the water and sewer utility is run and paid for separately by citizens outside of the services provided under Miramichi's general operating fund budget.

So the citizens that have water and sewer pay for that on top of their property tax rate. It could be argued that citizens receiving services at the outside rate are saving.

"The debate is on. It costs us more to provide those services to the outside areas for the fire trucks to run out there, for the gas for the policing instead of being in the core area. There's different ways of looking at it, but those living on the outside aren't going to see it that way," she said.

"Any service the inside core is receiving, they (outside ratepayers) do have that service ... All that is the same as anyone paying the inside rate."

Miramichi figures it would reap an extra $78,000 annually it the two rates were equalized.

In Fredericton, Coun. Mike O'Brien, chairman of the city's finance committee, has used the same argument that barring water and sewer services, which are run under the city's water utility, taxpayers on the City of Fredericton's outside rate have the same access to services as those on the inside rate.

O'Brien said taxpayers who don't pay the water and sewer costs on top of their property tax bill are saving about $550 annually.

The councillor said he wants to see city staff round up information about the history and basis for the split rate structure in Fredericton so that council can have a discussion on whether to change the tax rate policy.

If Fredericton abandoned its rate discount program for an estimated 400 homeowners, it could take in another $670,000 in tax revenue annually.

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