The province of New Brunswick’s proposed changes to the property tax system will tie tax rates to municipal costs rather than assessments.
At a legislative session, Local Government Minister Aaron Kennedy unveiled the province’s plans to overhaul the property tax system.
Kennedy tabled the Act Respecting Property Tax for first reading, a bill that contains several reforms aimed at making incremental changes to the property tax system to make it more predictable and stable in an effort to address spiking property tax bills.
The reforms include the introduction of local and provincial rate stabilizers, which will help governments move away from property taxes based on assessments and toward property taxes based on municipal needs and budget decisions.
“New Brunswickers have told us that they are worried about unpredictable property tax bills, unclear processes for property assessments, and confusion over where the money from property taxes is being spent,” said Kennedy at a press conference.
“These amendments will help create a more stable, predictable and transparent tax system that New Brunswickers can trust, and local governments can rely on.”
To achieve that, the proposed stabilizer will apply the Local Government Cost Index (LGCI), which is currently used to index the fiscal capacity fund and the capital renewal fund and is meant to reflect the realities local governments face, as opposed to just applying the Consumer Price Index.
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The LGCI is made up of four equal components: 25 per cent population growth, 25 per cent the Consumer Price Index, 25 per cent the non-residential building cost index and 25 per cent New Brunswick salaries and wages. It is subject to a minimum increase of zero per cent and a maximum of five per cent.
With the stabilizer in place, increases in property assessments do not automatically lead to higher property taxes. The stabilizer reduces the tax rate by the same percentage as the assessment increase to keep revenues stable, and the tax rate is then adjusted according to the LGCI.
For example, if property assessments increase by eight per cent and the LGCI indicates there has been a three per cent increase in costs, the tax rate will first decrease by eight per cent and then increase by three per cent.
The government is also increasing the local non-residential and heavy industry rate multiplier range to compensate for the decrease in the tax rate and balance revenue for local governments.
The multiplier is currently set at 1.4 to 1.7 and will change to a range of one to two.
Municipalities will have to justify rate increases
Starting in 2027, in addition to publishing the tax base increase, the government will publish the stabilizer for each municipality.
According to Kennedy, municipalities are free to decide on a different rate from what is suggested by the stabilizer, but they will be required to explain their decision on property tax bills sent to residents.
“It’s going to be very clear and transparent from the provincial government that this is what your tax rate should be,” he said. “Municipalities are an empowered entity as a local government that they can make the decisions that they deem best for the tax rate in their community, but they are going to have to justify that.”
Kennedy added that the bill will put pressure on municipalities to keep tax bills lower.
Last year, the Liberal government introduced a one-year freeze on assessment values for 2026 due to the significant increase in property tax bills.
With the rate stabilizer in place, Kennedy said it might be a “tough sale” for municipalities to increase the tax rate beyond what it suggests, as he believes people will be looking forward to the changes.
Other reforms include redesigning the property tax bill to use plain language and clearly show who is collecting the tax, where the money is going, what it is being used for and how it differs from the previous year.
It will also provide a breakdown of budget amounts by category for the current and previous year — such as public safety and road maintenance — and include reasons for any changes.
Government still working on industry revenue grant
The government is also extending the appeal period to give property owners 30 days to appeal the results of a property assessment review, an eight-day increase from the previous appeal period.
The proposed reform also includes the potential for a new heavy industry revenue transfer grant, which aims to improve fairness by ensuring communities with heavy industries receive more direct financial support to help cover the additional cost of servicing these properties.
However, officials said more work is needed to determine how the grant will be implemented. Currently, the government has collected $24 million for the grant, but it will establish the regulations in 2027.
The province first launched an effort to overhaul New Brunswick’s tax system last year and said it consulted the business community, local governments and advocacy groups throughout the process.
