The letter to the editor regarding property taxation by Jacob de Raadt in last week’s Chronicle contains a false assumption that I would like to comment on.
The claim of a “multiplier effect” between a tax increase and an increase in the assessed value of property is not correct. Mr. de Raadt claims that a 5 per cent municipal tax increase coupled with a 10 per cent property assessment increase equals 15.5 per cent more revenue to the town – not accurate at all.
The roll of property assessment is to ensure that a property owner living on a million dollar property on the lake pays significantly more property tax than someone living in a modest townhouse elsewhere within the Town. Property assessment does not “multiply” the amount of money that a Town would collect.
By Mr. de Raadt’s example, a zero per cent tax increase with a 10 per cent assessment increase would still mean 10 per cent more revenue coming to the Town. This is completely false. The mill rate is the figure that is multiplied against the assessed value of each property to calculate the taxes payable on that property. The mill rate is set by council to generate the total amount of taxes needed for the operation of the Town.
If a town collected $2 million in taxes last year and felt they needed the same $2 million this year they would have a zero per cent increase. The fact that assessments went up on average by 10 per cent would mean that the mill rate for calculating taxes in the current year would actually go down to generate the same $2 million in taxes.
Larry Schwartzenberger, Oliver councillor
