In boom times, overpaid corporate taxes are usually carried over to the next year in centers like New York, not this year according to the New York Times…
New York City, grappling with the aftershocks of the global financial crisis, has been forced to refund more than $800 million to companies that overpaid their taxes this year based on expectations of a more robust business performance.The refunds — three times the amount typically returned — have triggered deep unease among city budget officials, who are already struggling with weakening revenue and face pressure to slash services and raise taxes.
With many companies absorbing millions, possibly billions of dollars in losses, the outlook for funding of municipal services from corporate taxes in the coming years isn’t looking rosy.
The Canadian Situation
In Canada, municipalities are limited to collecting property taxes, and in the case of resort municipalities, they can levy an additional hotel tax. This may appear to limit exposure to fluctuations in the economy, but it is interesting to note that for 2009, all property assessments in British Columbia have been frozen (as low as the 2007 assessed level from my understanding)- effectively forcing many municipalities to increase the “mill rate” to maintain standard services. If anyone has a better understanding of the various announcements made on this topic, I’d love a condensed version!
Taxing authorities in B.C. (e.g. provincial government, municipalities and regional districts) are responsible for setting property tax rates based on their budget requirements. These budget decisions will take place in the new year. The Ministry of Small Business and Revenue, Ministry of Community Development and BC Assessment are working closely with local governments to address specific questions related to the freeze.
In New Brunswick, there is talk of the additional money that will be available from the increased property valuations…
Property tax bases are jumping across most of New Brunswick, but with an economic slowdown looming, the Opposition Conservatives are calling for some form of immediate property tax relief.
Service New Brunswick released its annual tax base assessments on Friday that showed the province’s tax base grew by 7.2 per cent or $2.3 billion between 2008 and 2009.
“I just hope that both municipal governments and provincial governments will be smart enough to figure out that it’s not the best time now to ask homeowners, businesses in this province to pay even more, a lot more tax,” Volpe said. “I hope they give them a break so they can survive.”
Instead of capping the assessment, Volpe said he would rather see a change in the actual tax rate so taxpayers are paying the same in 2009 as they did for the same property in 2008. And if local governments want additional tax revenue for services or new construction, they can justify that to their local taxpayers.
I think it is clear that despite much government intervention attempting to increase infrastructure spending, many municipalities around North America are in for a rough ride one way or another.
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