News Release

FREDERICTON (GNB) – Local governments and local service districts will receive more than $6.3 million this year in additional property tax revenue for 2021, due to the elimination of the Permanent Assessment Gap (P-gap).

Amendments to the Assessment Act designed to make the property tax system more fair, while raising additional revenue for local governments, came into effect Jan. 1.

“As we announced before Christmas when we introduced amendments to the Assessment Act, we are pleased that local governments and local service districts will see additional property tax revenue this summer,” said Local Government and Local Governance Reform Minister Daniel Allain. “We know many municipalities face fiscal challenges and that is why the additional revenue is so important. Ensuring our communities grow, are vibrant and provide quality services is my top priority.”

The changes will eliminate nearly all P-gap exemptions by 2025, for a total of $8.3 million in revenue once fully implemented. In July, local governments will receive about $5.3 million while local service districts will receive about $1 million. Grant information for each community is available online.

The amount for each local government and local service district will be equal to the net of the additional property taxes generated in 2021, based on the 2021 tax rate for individual communities, and the impact that this new assessment would have had on the 2021 Community Funding and Equalization Grant allocation.

The provincial government is committed to local governance reform and will release a green paper this spring. More information on the process and timelines is available online.

A total of 100,287 homeowners received amended property assessment notices in January as the result of the changes to the Assessment Act. Introduced in 2013, homeowners with a P-gap exemption have not been paying property taxes on the true market value of their homes.

The P-gap has significantly affected local government and local service district tax bases. With tax rates set in accordance with expenditure needs, the tax burden was shifted onto other properties, creating inequities in the property tax system for homeowners.

Local governments and local service districts will continue to receive additional property tax revenue from the elimination of P-gap, until the 100,287 affected properties return to their real market value assessment. About 82 per cent of the P-gaps have been eliminated in the first year. For future years, the additional eliminated P-gap assessment will be included as part of their annual tax base.