For 2nd straight year, inflation pushes P.E.I. property tax up to the max

For the second year in a row, residential property tax assessments in P.E.I. will increase by five per cent, the maximum allowed under provincial legislation.

That means property taxes owed by Island homeowners will increase by the same amount, all other things being equal.

Under the Real Property Assessment Act, increases in the assessment value by which owner-occupied residences are taxed is tied to the rate of inflation, as measured by the annual all-items consumer price index calculated by Statistics Canada.

For 2022 the index for P.E.I. was 7.7 per cent. The annual increase in assessment caps out at five per cent.

The inflation rate in P.E.I. has been the highest in the country since March 2021.

Last year the P.E.I. government offered a one-time subsidy to help offset the increase in property tax charges for homeowners. But the province has made no commitment to do the same this year.

"The 2022 Property Tax Subsidy was administered to further support Islanders during a time of unprecedented inflation coupled with transitional pandemic challenges," a spokesperson from the Department of Finance told CBC via email. 

"Moving forward, the province will continue to assess and evaluate the economic landscape, and will continue to make decisions that support Islanders during times of need and drive the local economy, while remaining fiscally responsible."

In January the province distributed an estimated $58 million in inflation relief payments through the Canada Revenue Agency, with individuals receiving up to $500, couples and single parents up to $1,000.

The province has also offered a property tax rebate for P.E.I. landlords this year, but only if they don't increase their rents.

With no property tax subsidy for homeowners this year, they would end up paying, compounded, 10.25 per cent more in property taxes than they did in 2021, assuming the tax rate in their municipality remains unchanged and there were no further changes in their assessment values.

There was no increase in residential assessments in 2021, after consumer prices remained flat through 2020, the first year of the pandemic.

The following table tracks changes in value for a home assessed at $350,000 in 2021, along with the corresponding increase in property taxes due on that home in either of the province's two largest communities, or in an unincorporated area (with no municipal property taxes, only provincial taxes charged).

One Charlottetown insolvency trustee said he's seen an uptick in inquiries from people seeking his services since the start of the year, as Christmas bills come in for people already struggling under inflation and rising interest rates.