FACT SHEET Property Taxes

							                                                                                Local Government / Gouvernements locaux

                                                   FACT SHEET
                                                     (December 2008)

                                                  Property Taxes
As part of his mandate, the Commissioner on the Future of Local Governance was required to examine the
property tax regime for both the incorporated and unincorporated areas of the province.

How property taxes are structured today:

Residential properties are taxed at a rate of $1.50 for each $100 of assessed value. This tax is to help pay for social
services including education and health care. However, since owner-occupied residential properties (homes) receive a
full credit (the Provincial Residential Property Tax Credit) against this provincial tax, no provincial property tax is paid
on owner occupied properties. Only non-owner occupied residential properties (apartments, cottages, 2nd homes,
vacant building lots, etc.) are subject to the full provincial $1.50 tax rate.

In municipalities (cities, towns & villages) all properties are subject to a local property tax rate established by local
councils to finance local services such as roads, policing, fire protection, recreation, and so on. For 2008, the average
municipal residential property tax rate was $1.51 for each $100 of assessment. This means that local taxpayers would
pay taxes of $1,510 on a home valued at $100,000.

In local service districts (LSDs) and rural communities, owner-occupied residential properties (homes) are subject to a
special provincial rate of $0.65 for each $100 of assessment. This rate is applied to help cover the cost of policing,
road services, administration and dog control which are provided by the province in these areas. In addition, the
Minister sets a local property tax rate to cover the cost of local services such as fire protection, solid waste collection
and disposal, street lighting and recreation services. The average LSD local residential property tax rate for 2008 is
$0.29 for each $100 of assessment. This means that the average LSD homeowner will pay a combined rate of
approximately 94 cents for each $100,000 of assessment in 2008, or an average of $940.00 in taxes.

The Province levies a property tax on all non-residential properties (commercial and industrial properties) at a rate of
$2.25 for each $100 of assessment. In addition, all local governments tax those properties at 1.5 times the
corresponding residential rate for local services. In 2008, non-residential properties are being axed at an average of
$2.27 for each $100 of assessment in municipalities. In LSDs, this same class of properties is being taxed at an
average local rate of $0.42 for each $100 of assessment.

What the Commissioner on the Future of Local Governance is recommending:

The Commissioner has recommended replacing the unconditional grant with a system to allow municipalities more
access to revenues through a property tax room transfer from the province. This would make it possible for
municipalities to collect up to $1.50 of the non-owner occupied residential (apartments, cottages, 2nd homes, vacant
building lots, etc.) tax rate, and up to $0.75 of the non-residential (commercial and industrial properties) tax rate in
each locale. The Commissioner indicates that a transfer of tax room in this fashion would require modifying existing or
creating new municipal property classes for taxation purposes. This concept is not entirely new to municipal councils
as user fees for municipal water and wastewater utilities are also structured by class of users. The Commissioner
believes that a tax room transfer would increase the revenue raising potential of communities and make each local
entity fully accountable for its taxation and spending decisions.

                          For more information, visit: http://www.gnb.ca/localgovernment