How P.E.I.’s property tax subsidy works

The P.E.I. authorities is subsidizing property taxes for owner-occupied residences this 12 months to assist Islanders cope with the very best inflation in many years.

The annual inflation charge for 2021 was 5.1 per cent. Meaning, by laws, taxable worth assessments — the worth used for owner-occupied residences — rose by the utmost 5 per cent.

Consequently, barring a change in tax charges, the quantity of property tax you’ll pay on your private home additionally rose 5 per cent.

Quite than change the tax charge, the province determined this 12 months to subsidize taxes in order that the provincial property tax paid wouldn’t change from final 12 months.

“We’re attempting to assist Islanders at this specific second in time,” Finance Minister Darlene Compton advised Island Morning host Kerry Campbell Wednesday.

“We’re taking a look at methods we may also help Islanders and that is considered one of them.”

Municipal taxes nonetheless up

The provincial subsidy doesn’t imply you will not be paying extra in property taxes this 12 months.

The subsidy applies solely to the provincial portion of the tax. The municipal portion remains to be working off that 5 per cent improve in evaluation.

What this implies specifically will differ from neighborhood to neighborhood. In Charlottetown, it means your whole property tax invoice will improve by about two per cent.

How a lot am I saving?

How a lot you save depends upon the assessed worth of your property.

However you possibly can see how a lot the subsidy is price in your invoice. On web page one, underneath the heading “Present,” there’s a record of expenses. These embrace what’s due from earlier years, provincial and municipal taxes, and Waste Watch charges.

There’s additionally a line that claims “Much less credit and funds.” Except you have got made an advance fee in your property tax invoice, that is the worth of your subsidy.

What about subsequent 12 months?

The annual inflation charge as of March was 8.9 per cent. Whereas inflation is predicted to fall earlier than the tip of the 12 months, there’s a good likelihood there will likely be an enormous leap in assessments subsequent 12 months as nicely.

Compton wouldn’t decide to extending any reduction program.

“We do not know what subsequent 12 months goes to seem like,” she stated.

“We all know this 12 months is especially troublesome as a result of we’re popping out of a pandemic and there are a variety of worldwide occasions that proceed to drive up costs. We’ll be there to help Islanders as a lot as we are able to.”

If there is no such thing as a help program subsequent 12 months, Islanders might probably see a ten per cent hike in provincial property tax.

Whereas that may be an enormous leap, it’s price conserving in thoughts that cash saved this 12 months remains to be cash saved. Even in the event you pay the total value subsequent 12 months, you will not this 12 months.

As for the opposite methodology of decreasing the quantity of property tax paid — a lower within the charge — Compton stated tax charges are one thing the federal government is all the time reviewing.