Interest on unpaid property taxes should drop now, say P.E.I. Liberals

·3 min read
Homeowners who haven't paid their property taxes for 2020 face interest payments of 18 per cent this year. (Laura Meader/CBC - image credit)
Homeowners who haven't paid their property taxes for 2020 face interest payments of 18 per cent this year. (Laura Meader/CBC - image credit)

The 18 per cent interest rate on unpaid property taxes is too high and should be reduced immediately, according to P.E.I.'s Liberal finance critic and former finance minister Heath MacDonald.

He said a lot of Islanders are struggling with their finances due to layoffs and business closures during the pandemic — circumstances beyond their control. He'd like to see the rate on taxes in arrears reduced from 18 per cent annually to between four and six per cent.

"There's still a lot that are hurting and a lot of uncertainty going forward, especially if you look at the tourism industry and the service sector on whether some businesses are even going to reopen or how many people they're going to hire," said MacDonald.

"We still have a part of our society out there that are very vulnerable and I think everything government can do right now will alleviate some pressure and stress for those individuals," he said.

The interest rates on unpaid property taxes should be reduced immediately, says Liberal finance critic Heath MacDonald.
The interest rates on unpaid property taxes should be reduced immediately, says Liberal finance critic Heath MacDonald.(Laura Meader/CBC)

Finance Minister Darlene Compton said the rates will be reduced to 12 per cent annually, which is in line with what the other Maritime provinces are charging.

"We want to ensure we're being fair to Islanders but we don't want it to be a loan to Islanders. We want to ensure that the people understand responsibility in paying their property taxes and making sure that they pay them on time," she said.

'Maybe he should've done it himself'

She said government recognized some Islanders are experiencing financial hardships due to the pandemic — that's why all payments were deferred until the end of 2020 instead of property owners having to make three payments during the year.

"We realized that we want to ensure Islanders are not in a hardship as far as paying their property taxes," said Compton.

Finance Minister Darlene Compton presents the 2021-22 budget in the P.E.I. Legislature March 12, 2021.
Finance Minister Darlene Compton presents the 2021-22 budget in the P.E.I. Legislature March 12, 2021.(Province of P.E.I.)

"If he (MacDonald) was concerned about this before maybe he should've done it himself," she said.

However, the reduction in the interest rate won't happen until Jan. 1, 2022.

It wasn't possible to make the changes earlier because budgets were already set, said the finance minister.

Property tax represents about 11 per cent of the province's revenue and is necessary for the province to deliver programs like health and education.

As of Dec. 31, 2020, 40,464 Island property owners had taxes owing the province, totalling more than $35.6 million, said the finance minister.

As of Feb. 28, some had paid their taxes and the amount owing was reduced to $23.7 million, which is within half a percentage point of the outstanding balance at this time last year, according to the province.

MacDonald, though, said Islanders need help now, noting the other Maritime provinces reduced their interest rates earlier this year.

"It's that bill, it's the Visa bill, it's the uncertainty of not knowing whether you're going back to work," he said.

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