Winnipeg Free Press - PRINT EDITION

Flat-rate property tax tabled

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FLIN FLON -- Robin Hood in reverse or overdue fairness? Those are the conflicting labels applied to a controversial new tax scheme Flin Flon city council is attempting to enact.

It's a two-step manoeuvre. First, council would remove the $1.6-million annual cost of police and fire protection from residential property taxes.

Second, they would evenly divide that expense among Flin Flon properties. All homeowners would pay $537 this year, $550 next year and so on.

The end result of these mathematical gymnastics: Homes worth the least would pay a few hundred dollars more in taxes and homes worth the most would save a few hundred. At least in the near term.

For many, it sounds counterintuitive, if not class warfare-ish. How can anyone hike taxes on the low end while dropping them on the high end?

But for the affable, unflappable Mayor George Fontaine, who calls the proposal an attempt to "level the playing field on a taxation basis," it's not that simple. And it's not.

For one, much of Flin Flon's real estate is not particularly valuable, as this cyclical mining town is only about half as populated as it once was.

The resultant surplus of cheap, older homes means basing property taxes strictly on market value, as is the norm across Manitoba, leads to huge disparities in tax bills.

Nearly a quarter of homes here paid under $300 in taxes last year -- not enough, Mayor Fontaine says, to cover their share of municipal services.

Newer, larger homes can face bills 10 or 15 times above that, in the low- to mid-thousands of dollars. And when council ups the mill rate, it is these homes that feel the impact.

Tough bananas, some say. If deep-pocketed residents want to live in a huge home with all the trimmings, they should pay more than the rest of us.

But even if council's proposal proceeds, high-end homeowners will still be paying far more. The worry is that continued taxation disparity of these proportions will drive them to neighbouring towns and cottage subdivisions and severely hinder new-home construction.

Of course, not everyone buys such arguments.

"With this proposal, we're not gaining any extra money," says Coun. Skip Martin, council's lone opponent. "We're just shifting the tax burden... from the high end to the low end in the residential areas."

Coun. Martin says the proposal would see the bottom 70 per cent of homes collectively pay about $400,000 more while the top 30 per cent saves about $140,000.

Stats like that worry longtime resident Dennis Hydamaka, an advocate for the poor. He fears more taxes on low-end rental buildings will mean higher rents for struggling welfare recipients -- and more traffic for the food bank at which he volunteers.

Such comments hit on the crux of the debate: It is impossible to tease apart residents who live in low-end homes out of financial necessity from those who are doing so by choice.

There are certainly many residents in the former camp. With a growing population of seniors and social-assistance families, Flin Flon is not as wealthy as it was 10 or 20 years ago.

Council's intent is not to crack open the piggy banks of low-income residents, but proceeding with this scheme guarantees that will happen to a certain, unknowable extent. Then again, the most any one homeowner would pay under the proposal (combined with a planned mill-rate boost) is about $350 extra in 2013. Will that break anyone?

Council had initially hoped to address the perceived taxation discrepancy by implementing a minimum tax, as in Saskatchewan next door, but the Selinger government balked at the idea.

So council did some research and found communities can charge for services such as police and fire protection through a homogeneous fee.

Due to local opposition, Manitoba's Public Utilities Board is likely to hold a hearing and give a binding ruling on the matter later this year.

At that point, the PUB will have to decide which conflicting label will be affixed to this proposal.

Jonathon Naylor is editor of The Reminder newspaper in Flin Flon.

Republished from the Winnipeg Free Press print edition May 25, 2013 A17

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