Most Rosslanders think we're hammered hard by taxes—we gave ourselves a D for taxes in the recent State of Rossland self-assessment—and we are liable to complain vociferously about the fact that the average household tax burden is about $1000 greater than that carried by the average Trailite or Castlegarian.
It's an emotional issue worthy of facts to keep it real. A recent comment by Leigh Harrison on the Rossland Telegraph stated concern that we continue to experience “tax increases that far exceed inflation."
Is that true?
Well, both yes and no. Click on the image above to take a closer look at the graph.
Take note, however: tax increases haven't come close to matching the massive increase in property values—not that this helps the homeowner with no plans to sell.
Taxation is a complicated mess. The point here is to try and simplify it. Here goes…
On the one hand, property owners pay tax as a percentage—the mill rate—of the assessed value of their property, as determined by a provincial assessor who comes up with a value for both land and buildings—"improvements"—that is supposed to reflect the market value.
On the other hand, council has a budget and operates in terms of total tax revenue, as well as juggling other forms of revenue such as fees, fines, grants, and so forth. In Rossland, tax revenues in the last decade have typically made up a third to a half of the city's total income.
When property values drop, the city has to increase its mill rate just to keep tax revenue the same. In fact, this is exactly what happened last year. The city made no net increase in tax revenue—as a whole, we paid the same amount of tax—but the mill rate was increased because property values had sunk by about 5 per cent across the board.
Again take note: the burden wasn't shifted fairly. Single family home assessments typically dropped by one or two per cent, while strata properties dropped by an average of 19 per cent, so strata owners had a lower tax bill while single family home owners had a slightly higher bill, even though the city's revenues remained the same.
Now to the thorny issue of comparing our taxes to inflation.
First, we got data on the annual Consumer Price Index, a measure of the average cost of goods and services, and used that to calculate annual inflation. That's plotted in blue below.
Second, we got the city's audited statements since 2002 from Rossland's manager of finance, Deb Timm. Thanks Deb!
Each year, most people who live here in their own home can get the "homeowner's grant." This accounted for about 1.6 per cent of the tax revenue in Rossland. An interesting aside is that this has dropped from about 3.6 per cent in 2003—either the government is shelling out less, or fewer people are eligible due to out-of-town owners or rental properties; we don't know which it is.
In any case, we looked at raw tax revenue as if the grant didn't exist. We also subtracted "non market changes" in tax revenue—that is, when people make new construction and development, the tax base increases. We took that out of the equation to look at the typical homeowner's tax burden.
We also accounted for an anomaly in 2009 when the city bowed out of the regional recreation pie, saving some money from people's regional tax bill that was then added onto the municipal tax bill. Although it looks like city taxes were higher by the recreation amount, regional taxes were lower by the same amount.
Then we divided each year's tax revenue by the number of residential properties. Other groups such as businesses, industry, forests, and farms also pay into the total tax revenue, but residences still bear about 90 per cent of the burden. Furthermore, the relative burden among these groups hasn't changed significantly in the last decade. For our purpose, the number of residential properties gives a fair estimate of the number of taxpayers.
(There’s one anomaly here: in 2003 for some as yet unknown reason, the number of residential properties dropped by 181. Consequently, the per household tax appears to have increased, even though total tax revenue that year decreased by some $50,000.)
Finally, we used these numbers to calculate the annual change in an average householder's tax bill. We've plotted these in red below.
And wow, there it is! A 6.6 per cent increase in taxes in 2007 over 2006, more than double the year's inflation. In 2008, a tax increase of 9.2 per cent, well over double the rate of inflation. And in 2009, despite negative inflation (we all remember that bubble bursting), taxes went up a whopping 17.8 per cent.
But hold on there, some perspective, please. The graph also has green bars. These show how much the average assessed value of a Rossland home has changed year to year.
In 2003, the average residential unit was worth about $81,000, and the total value of homes in Rossland was about $158 million. In 2010, despite the bursting bubble, the average unit was worth more than $223,000 and Rossland's homes were worth $525 million in total.
Have the taxes increases been fair? Do we benefit from superior services in this town relative to other towns? Do we have to contend with greater snow loads and older infrastructure? Is it the price of living without a major industry in a picturesque mountain town? Or has this money been flushed down leaky sewer lines in scandalously over-budget debacles?
More to the point, is the present council responsible, or previous administrations?
We leave it to you to decide.