Nova Scotia Premier Tim Houston announced changes to a controversial new non-resident property tax plan during a speech in Halifax on Tuesday.
The tax of $2 per $100 of assessed value for non-residents was announced in the spring budget, along with a five percent deed transfer tax for non-residents who purchase a property.
The province said the revenue from the new taxes would be used to help address the housing crisis, but the property tax measure has faced backlash from seasonal residents who own cottages or other properties in Nova Scotia.
The deed transfer will not be changed, but the property tax levy will now be tiered to soften the blow of the new measure, which had been expected to garner the province $65 million in new revenue.
The changes will see an exemption for active members of the Canadian Armed Forces and the introduction of a tiered tax regime based on the property assessment.
According to the province, the changes will benefit the owners of smaller properties like cottages.
- Properties assessed at under $150,000 will be exempt from the tax.
- Properties assessed at between $150,000 and $250,000 will be taxed at 0.5 per cent.
- Properties assessed at over $250,000 will be taxed at two per cent.
- All vacant residential land owned by non-residents will be taxed at two percent regardless of assessed value.
Those changes will mean a $23.2 million hit to the province’s original revenue target, reducing the anticipated new revenue amount to $41.2 million, according to the premier’s chief of staff, Nicole LaFosse.
During his state-of-the-province speech Tuesday to the Halifax Chamber of Commerce, Houston suggested the original tax plan was drafted in a hurry.
“We’re working hard to make real change for Nova Scotians and as the government we’re moving pretty fast,” said Houston. “But when you move fast sometimes you need to pause and adjust course.
“We are not so arrogant that we can’t admit when we need to adjust.”
Houston said the change was a better balance, and the adjustments are “more than fair.” He said he hoped seasonal residents “will see that our province is truly worth it.”
“We are positioned to grow in every region, but we need housing,” Houston said. “This is one way our government is addressing the housing crisis and these changes respond to concerns we have heard from Nova Scotians.”
Tax is flawed, Rankin says
Liberal leader Iain Rankin, who was at the event, said while he was happy with this change, the tax policy remained flawed.
“It is bad policy, but at least they’re showing that they’re listening to people and their concerns,” said Rankin. “We’re happy to see that but the money should be going to municipalities.
“The province shouldn’t be reaching into municipal jurisdiction.”
Several municipalities had raised concerns about the tax on non-residents.
Vernon Pitts, the warden of the Municipality of Guysborough, wrote a letter to the premier in April that asked him to rescind the decision and hold consultations with municipalities on the housing crisis.
Some businesses had also indicated they were reconsidering their development plans for the province in light of the new tax.