Friday, December 19, 2008
The whole system of property tax assessment in Ontario is flawed. It is based on the false premise that housing prices always increase and never fall. It only takes into account inflationary housing cycles as the one we have just finished--never a deflationary cycle as we are about to enter. Essentially, if these valuations hold up, property owners are facing a financial double hit--shrinking property values while paying inflated taxes on them. It's the financial equivalent of a man saying that were not at the mountaintop yet while looking over the edge of a cliff. In the US, the housing market collapse has seen a corresponding shrinkage of property tax revenue for municipalities. City taxes there are based on the current value of property and take into account deflationary aspects.Tax collections are suppose to fall if the asset valuation they are set upon are falling.
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