Civil Thoughts Series, No. 29
Courier Weekend (St. Stephen, NB), 32/11, A-5, 1 May 2009
Should property tax relief be granted?
And hundreds of thousands of retired parents who have only the house left after they’ve seen their kids into the wide world, entrepreneurs who provided a succession of services of society, the elderly who reached the sixth of the seven stages of life, and widows who never “worked,” would agree with me, especially when any of them consider their Canada Pension Plan income.
If one accepts the argument that any taxation is payment for services, and that taxation is better applied progressively, then scaling of the property tax has an arguable point of departure.
Moreover, inasmuch as pension levels are determined by levels of contribution, then inversely the amount of total tax an individual is responsible for can also be argued to best be regarded as a cumulative measure.
In other words, the nature and quantity of an individual’s total tax contribution to a society influence how that society provides for that individual, and, as well, determine the value and cost that ought to pertain for any such provision.
Some or all of this pertinence, thus, can be provided through tax relief, particularly upon residence, as shelter represents one of the fundamental components of the first level of the hierarchy of needs.
In this regard, I support property tax credits because it relates directly to income, but as such credits fail to diminish liquidity concerns, I also favour direct exemptions and grants, whether intermittent or permanent. Although exemptions and grants both displace the tax burden, I think this not unreasonable for an advanced society that has the wherewithal to do so through such a construct.
In the same line of social argument, I would support tax deferrals that would ultimately be paid by an inheritor or buyer. I regard assessment credits as a less favourable approach as it ties relief directly to capital reduction and only indirectly to income and contribution.
Introduction into the social argument of levels of income and their relationship to capital often bring into consideration the notion that the guiding principle of taxation ought to be ability to pay.
Even if the ability to pay appears obstructed, those who have depressed income but are asset-rich, particularly when the asset is a home, can avail themselves of equity loans or reverse mortgages. Nevertheless, debt requires payment, and that is a clear condition that, along with reduction of control of the asset, lessens the ability to achieve repayment. In this regard, then, I would also prefer the application of tax deferrals.
Should tax relief be limited to deferrals and, furthermore, should any such relief be allocated primarily to young families?
I think the issue is more one of social philosophy than of tax mechanism.
If one accepts the validity, or at minimum, the utility of tax relief, then one is inevitably into philosophical territory. And once councils get onto philosophical terrain, even if it’s clothed in the guise of economic development, or opportunity, or equality, intellectual favoritism must set in.
What, for example, if the perspective is one that says that having children is a choice, and that the choice implies acceptance of its costs? Is it fair, thirty years on, for those same individuals to have to divest themselves of their house because the property taxes are no longer affordable?
What if one chooses not to raise a family? Not everyone wants to or needs to.
It may be true that those with property but little income can sell and move, but it’s also true that those with little income and no property can move to buy. Moreover, it’s considerably more disadvantageous for the income-poor than the asset-rich. Lack of cash flow will bite far faster than lack of assets.
Favoritism, I would argue, is fair if the authority implementing it thinks it’s fair for the community as a whole. Essentially then it is transformed into policy.
If one stretches the argument of limitation of payment of taxes a bit more, essentially and eventually it says that any one who is struggling to pay the bills may be candidates for tax relief.
In a market economy, that could be almost everyone.
Then no one pays the taxes.