On the 1st of this month, Bill 52, an amendment to the Halifax Regional Municipality Charter allowing HRM Council to set separate commercial tax rates in areas it designates, received its First Reading in the Nova Scotia Legislature.

The Bill (as tabled) provides that Council may:

(a) Set different commercial tax rates for commercial property located in areas of the Municipality designated by Council, based on the assessment of commercial property under the Assessment Act;

(b) Set different commercial tax rates for commercial property located in areas of the Municipality designated by Council, based on the length or proportion of frontage of a property on a street, including a private road;

(c) Set additional tiered or escalating commercial tax rates based on the factors set out in clauses (a) and (b) that are in excess of the rates set in clauses (a) and (b); and

(d) Set additional or different commercial tax rates using any combination of clauses (a) to (c).

The infusion of flexibility into the taxation regime is laudable, and while the tools could allow Council to, for example, provide assistance to owners affected by construction in the Downtown, or to reduce the tax rate in areas in the City that have been impacted by rapidly rising assessments, the potential changes allowed by the Bill won’t be the panacea for all commercial tax woes.

The potential for inequitable tax loads where “street frontage” is used, in whole or part, to calculate the tax rate is alarming (and puzzling) especially for properties located on corner lots or developed less intensively than neighbouring properties. It appears to be a way of circumventing the current ad valorem methodology for distributing the tax load. There have been many attempts worldwide to eliminate or “improve” the ad valorem (market based) method of allocating property taxes: none have yet been successful… some, such as the late Mrs. Thatcher’s infamous poll tax in the United Kingdom, resulted in riots.

There would be winners and losers for each amendment being proposed; any change to tax rates in one area, or upon one class of property, will shift the burden onto another, because there is nothing in the Bill that would reduce the overall contribution of the commercial sector to the City’s tax base. The true elixir would be a change that would make all commercial owners better off.

It’s unclear how Council will utilize their new tools, but it’s not anticipated that the Bill will result in any widespread changes to commercial taxation in the short term. We are monitoring the situation closely, and will provide updates as changes occur. Stay tuned.