To the Editor,
Re: Gov’t gets it wrong at assessment time, Feb. 14
Writer Joe Sawchuk describes an irresponsible local government’s handling of local property taxation. While it is true that a local government can raise property tax income when assessed values increase by simply keeping the mill rate the same as last year, responsible governments do not do that.
He correctly described the property tax formula as the product of assessed value multiplied by the mill rate divided by 1000. However, he did the reader a great disservice by not explaining how the annual mill rate should be established.
In simple terms, the local government, by designing an annual budget, determines the amount of money needed from property taxation to operate in the next year. Next, the council determines the amount of tax money that is to be raised by each of the property classes: business, industry, residential, etc. Finally, the amount of money to be collected from the residents is divided by the total assessment value of that property class and the result is the mill rate.
A responsible local government will then test that rate on a typical home in the city; what is the increase from last year, will the amount be accepted by the homeowner, will there be political ramifications of the new taxes? If deemed unacceptable, the local government goes back to the budget process to either reduce the total budget or change the percentage of money to be collected from each property class.
Responsible local governments do not simply use the prior year’s tax rate. Should they do so, they deserve every reason to be voted out at the next election.
Bob Kanngiesser,
Port Alberni