The P.E.I. government is subsidizing property taxes for owner-occupied residences this year to help Islanders deal with the highest inflation in decades.
The annual inflation rate for 2021 was 5.1 per cent. That means, by legislation, taxable value assessments — the value used for owner-occupied residences — rose by the maximum five per cent.
Consequently, barring a change in tax rates, the amount of property tax you would pay on your home also rose five per cent.
Rather than change the tax rate, the province decided this year to subsidize taxes so that the provincial property tax paid would not change from last year.
"We're trying to help Islanders at this particular moment in time," Finance Minister Darlene Compton told Island Morning host Kerry Campbell Wednesday.
"We're looking at ways we can help Islanders and this is one of them."
Municipal taxes still up
The provincial subsidy does not mean you won't be paying more in property taxes this year.
The subsidy applies only to the provincial portion of the tax. The municipal portion is still working off that five per cent increase in assessment.
What this means in particular will vary from community to community. In Charlottetown, it means your total property tax bill will increase by about two per cent.
How much am I saving?
How much you save depends on the assessed value of your property.
But you can see how much the subsidy is worth on your bill. On page one, under the heading "Current," there is a list of charges. These include what's due from previous years, provincial and municipal taxes, and Waste Watch fees.
There is also a line that says "Less credits and payments." Unless you have made an advance payment on your property tax bill, this is the value of your subsidy.
What about next year?
The annual inflation rate as of March was 8.9 per cent. While inflation is expected to fall before the end of the year, there is a good chance there will be a big jump in assessments next year as well.
Compton would not commit to extending any relief program.
"We don't know what next year is going to look like," she said.
"We know this year is particularly difficult because we're coming out of a pandemic and there are a number of global events that continue to drive up prices. We'll be there to support Islanders as much as we can."
If there is no support program next year, Islanders could potentially see a 10 per cent hike in provincial property tax.
While that would be a big jump, it is worth keeping in mind that money saved this year is still money saved. Even if you pay the full cost next year, you won't this year.
As for the other method of lowering the amount of property tax paid — a decrease in the rate — Compton said tax rates are something the government is always reviewing.