Province's School Tax Deferral Plan For Cottage Owners Makes Little Sense

The Manitoba govenment's plan to allow a deferral of a portion of school property taxes in 2010 and 2011 isn't any great favour to cottage owners, according to Dave Crabb, the president of the Mnaitoba Associaton of Cottage Owners (MACO).  "It's another case of tinkering, and it's not a fiscally responsible way of handling it," he added.

Manitoba Finance has advised cottage owners that they have the option of paying a portion of their 2010 and 2011 property taxes over a longer period of time through the Cottage Property Tax Increase Deferral Program.

Cottage owners can apply to defer the increased portion of their property taxes for 2010. If they want to defer their 2011 property tax increase, they are required to apply next year.  The government recently announced that applications are now available for the deferral plan.

Under the deferral plan, the Manitoba govenment will pay the municipality on behalf of the cottage owner, who would then repay the province over time or when the property is sold or transferred to another person.  Cottage owners who are part of the program will receive an annual statement of their tax deferral amount, plus accumulated interest.

Crabb said MACO passed a motion at its most recent meeting stating it doesn't support the deferral "for the simple reason it presents no action or resolution of the education funding issue."

As part of a coalition that includes Winnipeg REALTORS, the Manitoba Real Estate Association as well as business and farm organizations, the MACO has been calling upon the province to abandon using property as a means to raise money for education.  The coalition, representing about 250,000 Manitobans, says education is a social benefit similar to health care and as such funding should come from general revenues.

Crabb said that it is only fair that the province assesses taxes based on income and ability to pay, which is the role of income taxes that go into the province's general revenues.

On June 10 last year, MACO held a rally at the steps of the Manitoba Legislature protesting the unfairness of taxation by school boards on cottage properties.

Cottage owners pay school taxes, despite not being able to have their children attend the schools in the division where their cottage is located and not being able to vote in local school board elections.

On the other hand, cottage owners also pay municipal taxes and are able to vote for reeves and councillors.

Cottage owners will pay a higher share of school taxes this year as a result of a province wide reassessment - based on market prices as of April 1, 2008 - which reflects a significant increase in the value of cottages.  School taxes for cottage owners are projected to increase anywhere from 20 to 200 percent (only a small number will pay the higher percentage), depending upon the school division in which the cottage is located.

Crabb said the result of the increased school tax load for cottage owners is paying a lot more for nothing in return.

The provincial property tax deferral plan only covers the tax increase imposed by school divisions last year, according to Crabb.

He said a number of items have not been determined to cover the deferral, and cottage owners still have to pay their taxes over the long term, interest accumulated and the lien applied by the province in order to qualify, which has to be removed when the period of deferral is completed.

"It makes no sense whatsoever," he added.  "I don't see where anyone is being done a favour."

Article from June 18, 2010 WREN

 

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