Saint John gets1st property tax cut in 12 years after province took away tax break for some

Eliminating a tax cut for a select few is allowing Saint John to reduce property taxes for all homeowners.

Council approved a 1.5 cent reduction in property tax rates for 2022 Monday night. This cut came after after the province stopped giving tax breaks to 102,000 households under the P-Gap, or Permanent Assessment Gap, program.

The cut was put in place to help some homeowners avoid a spike in their tax assessments when the province changed to a market value system in 2013. Originally, those property owners were to continue to receive the P-Gap tax break as long as the property did not change hands.

According to a provincial news release, the removal of the P-Gap will result in an average property tax increase in the range of $100 to the 102,000 households.

Based on the province's estimates there will be at least 10,000 residential properties in Saint John that will not longer get that provincial tax break through P-Gap.

The savings from the removal of the tax break is being given to municipalities. Saint John received approximately $1 million, and decided to use it to reduce property taxes to $1.77 per $100 of assessed value.

Coun. Gary Sullivan, a member of the city's finance committee, said this extra revenue is significant because it's a recurring $1 million.

"It means every year the city's going to get a million more dollars. And that's important when you're looking at doing something that is recurring, like reducing the property tax rate," he said.

Chair of the finance committee Coun. David Merrithew said the city's tax rate is 30 per cent higher than the surrounding areas, which is having an impact on the city's tax base. This is why the city decided to use the P-Gap savings directly for tax reduction.

Sullivan said the city is working toward a 20-cent reduction in taxes in the long term.

Moncton's tax rate is about $1.65 and Fredericton's is about $1.43 per $100.

"We stand out," Sullivan said. "We certainly need to be competitive with those prices."