The PEI government has subsidized property taxes on owner-occupied housing this year to help islanders cope with the highest inflation in decades.
The annual inflation rate for 2021 is 5.1 percent. This means that according to the law, taxable valuations – the value used for owner-occupied housing – have increased by a maximum of five percent.
Therefore, if the tax rates do not change, the amount of property tax you would pay for your home has also increased by five percent.
Instead of changing the tax rate, the province decided to subsidize taxes this year so that the provincial property tax paid does not change from last year.
“We are trying to help the islanders at this particular time,” Treasury Secretary Darlene Compton told Island Morning host Carrie Campbell on Wednesday.
“We are looking for ways we can help the islanders and this is one of them.”
Municipal taxes are still rising
The provincial subsidy does not mean that you will not pay more property taxes this year.
The subsidy applies only to the provincial part of the tax. The municipal part is still working on this five percent increase in the assessment.
What this means in particular will vary from community to community. In Charlottetown, this means that your total property tax bill will increase by about two percent.
How much do I save?
How much you save depends on the appraised value of your property.
But you can see how much the subsidy costs in your account. On the first page, under the heading “Current”, there is a list of fees. These include due from previous years, provincial and municipal taxes and waste monitoring fees.
There is also a line that reads “Fewer loans and payments”. Unless you have made an advance payment on your property tax account, this is the value of your subsidy.
How about next year?
The annual inflation rate as of March was 8.9 percent. While inflation is expected to fall before the end of the year, there is a good chance that next year there will be a big jump in estimates.
The government is constantly reviewing tax rates, says Finance Minister Darlene Compton. (Kirk Penel / CBC)
Compton will not commit to expanding any assistance program.
“We don’t know what next year will look like,” she said.
“We know this year is particularly difficult because we are coming out of a pandemic and there are a number of global events that continue to raise prices. We will be there to support the islanders as much as we can. “
If there is no support program next year, islanders could see a 10 percent increase in the provincial property tax.
While this would be a big leap, it is worth bearing in mind that the money saved this year is still money saved. Even if you pay the full cost next year, you won’t do it this year.
As for the other method of reducing the amount of property tax paid – reducing the rate – Compton said that tax rates are something that the government is always reviewing.
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