Halifax is set to request a review of Nova Scotia’s capped assessment program from the province due to concerns raised by councillors and a recent report about the need to address an unfair property tax system in the capital region, which negatively impacts housing affordability.
During a discussion on Tuesday, Halifax regional council deliberated on a city staff report that highlighted the protective nature of the provincial capped assessment program for long-term homeowners but also identified “significant inequities” and distortions in the market as a result.
According to the report, 79% of taxable properties in Halifax are under the cap, leaving the remaining 21%, including new homebuyers and large apartment buildings, to bear a disproportionate tax burden. This situation has led to intergenerational inequalities, as mentioned by Coun. Janet Steele, who emphasized the need for reform to create a fairer assessment program that supports both new homeowners and the city’s growth.
Over the last two decades, rapid population growth and development in Halifax have seen market rates increase significantly, while capped assessments tied to inflation have only risen by 2-3% annually. Consequently, tax disparities now exist among similar properties on the same street based on the duration of their capped status.
Councillors highlighted instances where older residents delay downsizing or young families refrain from moving to larger homes due to the risk of losing cap protection. The council voted 12 to 5 in favor of a motion by Steele to urge the municipal affairs minister to review the staff report, collaborate with Halifax and other municipalities, and explore solutions to enhance fairness and support housing affordability.
The report indicated that removing the cap would not increase property tax revenue for Halifax but would lead to a more equitable distribution of taxes among all properties. It is estimated that approximately 16,000 homeowners would pay less under this scenario.
Furthermore, if the cap were eliminated in the current fiscal year, Halifax could have reduced the urban residential tax rate by about 24%, resulting in potential savings for apartment buildings with four or more units. While it remains uncertain if these savings would benefit renters, any reduction in landlord or developer expenses could help stabilize rent increases in Halifax.
City staff recommended a phased approach for any major changes to the system to avoid sudden tax spikes for long-term capped property owners. They also acknowledged that altering the cap would pose political challenges and likely require bipartisan support in the legislature.
Coun. Sam Austin proposed incremental adjustments to the program, suggesting modifications such as excluding vacation homes from the cap or limiting tax savings for multi-million dollar properties. Austin emphasized the importance of improving the program, particularly for military families who often relocate and do not benefit from the cap.
In addition, the council agreed to share the report with provincial opposition parties to initiate broader discussions on the impact of the cap on housing affordability.