Wednesday, January 30, 2013

Assessed Value, Tax Rates, and Total Tax Revenue

Too many people, incorrectly, use "Tax Rates" as a measure of comparison from one local government to another. Tax rates are only a tool, albeit an important one, to ensure the required revenue to meet annual budgets is met.

The following explanation from Corporate Services, City of Abbotsford, will hopefully clarify this subject for those still unsure:
 
Comparing Tax Rates

Tax rates are not a direct indicator of comparative tax costs between cities. They must be interpreted in conjunction with average assessed values, which vary significantly between cities. Without that reference point, they are meaningless.

(Having said that, however, if rates are to be used as a comparator, one must include the fact that, since 2005, Abbotsford's tax rate increased from 4.83072 to 4.9075, an increase of 0.33%!)

Comparing Total Taxes and Charges on Representative Properties

The Province of BC publishes a listing of “Taxes and Charges on a Representative House”. This is the closest data comparison available to compare relative tax burdens between cities for residential properties. It shows what a typical house in each city pays annually in total taxes and charges (both municipal and non-municipal).

Assessed Values are a Useful Tool for Allocating Tax Charges

Assessed values are a good tool for allocating the city’s tax requirement across properties. More expensive properties (those with conceivably greater ability to pay) pay higher taxes. Less expensive properties (those with conceivably lesser ability to pay) pay lower taxes.

Assessed values are not a good tool for dictating the city’s total tax requirement. Assessed values have virtually no relationship to municipal expenses, so it follows that they should not drive tax revenues. Why, for example, should the city increase its tax revenues by 10% in a given year, simply because land values have risen? Similarly, does the fact that Abbotsford has lower land values than Vancouver or Surrey automatically mean that it has lower costs of doing business? With very limited exceptions (e.g. land purchase for road right of way), the answer is no.

 
How Abbotsford Calculates Tax Charges on Specific Properties

1. Council approves a total tax revenue requirement, separate from any market movement in assessed value (which has no impact)

2. The tax rate is set such that the total required tax revenues will be collected from properties, given their current assessed values. (Council has the option to choose to allocate tax charges in varying proportions to each class of properties.)

3. The total tax charge per property class is allocated to specific properties in proportion to their relative assessed values.

Saturday, February 18, 2012

Government and Morals

WHAT IS THE GOVERNMENTS ROLE IN PROMOTING MORALS?

The recent public discourse regarding a particular brand of entertainment coming to our city has renewed the ageless debate about government’s role in the lives of its citizens, and its duty to legislate for and uphold the law. This has not been the first time I have been challenged to reflect on my role as a Council member with respect such matters, and I’m sure it won’t be the last. The last issue of significance that polarized community opinions was the question of whether or not to allow slot machines into our community, which for some, was a moral issue.

In my reading, I came across an excellent essay on government’s role in promoting morals, the contents of which I’ve paraphrased and summarized below. It expresses very well what I believe, and what I also believe ought to be regarded, by the public, as government’s appropriate role in questions of moral duty. To view Marcus Cole's entire essay, I have left a referring link at the end.
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In his essay on this topic, Marcus Cole cites a noted professor of law, who provides two distinct moralities of law: the “morality of duty” and the “morality of aspiration”. The morality of duty consists of the basic proscriptions—against murder or theft, for example—required by any governmental authority; that lower standard of morality and behavior by which a much greater part of society agrees it ought to be judged, measured, and even constrained. These are the rules that all must be expected to obey.

The morality of aspiration, however, is a different matter altogether. It comprises the rules associated with promoting virtue, or moral principles to which humans ought and hope to aspire; the higher standard of morality to which both churches and individuals hope to conform.

Morality of duty is not frequently what is at issue; disagreements usually center on the morality of aspiration. The real question is not whether the government has a role in prescribing morals, but which type of morality the government should prescribe, and it is this question that Cole’s essay addresses so well.

Should the government legislate virtue? Where did this inclination originate? The idea that government is a proper source of moral guidance is, in fact, a relatively young idea in human history. Throughout most of the history of Western Civilization, questions of morality were administered by institutions (Church) wholly separate from, and in competition with, the institutions that administered law (State). They existed as co-equal sovereigns.

This state of affairs changed when a particular King of England felt his personal choices were being constrained by the Church. He decided to imprison and execute a queen so that he could marry another, more “worthy” of the throne. Ever since that point in time, the state has assumed traditional functions of the church, relating to marriage, education, and other moral pronouncements.

Cole asks a number of pointed questions: Why should government be expected to provide moral guidance? Is it something better than the individual? Is it “practiced” by those higher or more virtuous? Does it respond to popular, obviously flawed concepts of virtue? Even if it does, are its operatives sufficiently skilled to regulate such a delicate area of human affairs?

Furthermore, even if legislation actually reflected the will of the majority, why should one expect fifty-one percent of the electorate to be particularly “moral?” The simple and familiar examples of the duly elected Chancellor of Germany in the 1930s and 1940s and Jim Crow legislation throughout the South during much of the twentieth century, should disabuse one of the notion that majorities are always “moral majorities.”

For Christians, morality, virtue, and salvation require freedom. Law, and government enforcement of it, is coercive, and legitimately so. Although we can compel compliance with the law through physical violence, we cannot compel salvation, virtue, or genuine morality through such means.

As a Christian, I believe that we cannot, through government’s monopoly on the legitimized use of physical violence, compel the ultimate choice between good and evil, between salvation and damnation. This is the very choice for which our Creator gave us free will. To be Christian ultimately means to believe in freedom: freedom of conscience as well as of action, freedom to choose or reject sin or salvation, so long as our actions do not injure others or deprive them of their equal freedom. A famous British jurist once said: “My right to swing my fist ends where the other person’s nose begins.”

The Canadian Charter of Rights and Freedoms is applicable to all Canadians in all situations. Sections 1 and 2, in particular, have application in this matter:

1.    The Canadian Charter of Rights and Freedoms guarantees the rights and freedoms set out in it subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society.

2. Everyone has the following fundamental freedoms:

(a) freedom of conscience and religion;
(b) freedom of thought, belief, opinion and expression, including freedom of the press and other media of communication;
(c) freedom of peaceful assembly; and
(d) freedom of association.

This is not to say that government does not do certain things well. It does. It is great at collecting taxes. It is relatively good at providing everyday needs like water, sewer, transportation, and policing criminal harms – the “morality of duty”. Asking government to compete with freedom when it comes to aspirations and virtue, however, is asking it to aspire to heights beyond its reach. So, if one really cares about morality, why would one let government anywhere near it?