Iqaluit seeks consent to reduce tax arrears charges
“Why are you charging loan-sharking interest rates?”
Iqaluit’s city administrators may already have a priority wish for the next territorial government – help put the city’s property tax issues to bed.
A meeting between administrators and Iqaluit East MLA Ed Picco earlier this month suggests council may soon ask the legislative assembly to give Iqaluit more flexibility in imposing interest charges for unpaid taxes. He said the city wants to bring its interest rate down, but can’t.
According to Picco, the meeting singled out Iqaluit’s interest on unpaid taxes as one of the main causes of the emotionally-charged debate this year when the city seemed poised to auction off several residents’ homes.
Picco added that the city is also looking for the legal means to partially write off some outstanding debts.
The former city council announced this summer that it would sell 13 residences and four business properties in an effort to make up for the lost revenue, which had reached $612,000 in unpaid property tax.
The council hit a legal snare in trying to sell the homes, and has since pursued several cases in court.
Although he declined to comment on specific cases, Picco said the city’s hefty interest rate was partially to blame for the accumulation of unpaid taxes, which reached $170,000 for one household.
Under territorial law, the city can charge up to 24 per cent annually on unpaid property tax bills. Picco said the city wasn’t justified in maintaining that rate.
“This (the City of Iqaluit) is a not-for-profit corporation,” Picco said in a recent interview. “Why are you charging loan-sharking interest rates?”
Picco said he told the city about six months ago that it should consider looking at how territorial legislation might help fix its perennial problems collecting property tax. He added that it would be too late now for the current legislative assembly to make any changes.
While the city’s interest rates have been criticized before, Picco’s meeting with administration on Nov. 18 could mark the first time city administration has considered lobbying the government of Nunavut about unpaid property taxes.
Iqaluit has complained in the past that under the Cities, Towns and Villages Act it lacks the legal ability to change its interest rate on property tax, Picco said.
City administration declined to comment on the meeting.
However, in an interview before the meeting, Ian Fremantle, the city’s Chief Administrative Officer, identified miscommunication between the city and some ratepayers as a leading cause for the outstanding debts.
He said that meetings with Nunavut Tunngavik Inc. and representatives of the territorial government have eliminated communication problems that existed in the past.
The city has also been discussing the issue of property tax arrears with the Nunavut Housing Corporation, Qikiqtani Inuit Association, and the territorial Department of Community Government and Transportation.
Fremantle noted that the city had made significant progress on tax-collection since August, whittling the list of the 17 largest debts without payment schedules down to two.
On Nov. 6, the city’s lawyer dropped a civil case against Jonah and Lizzie Kelly, leaving only Jetaloo Kakee and elders Akeeshoo and Alicee Joamie on the city’s list of high-profile taxation cases.
City documents indicate that Kakee owes around $140,000 in backtaxes, while the Joamie’s owe almost $50,000. The outstanding cases are due in court on Dec. 4.
“I think it’s great,” Fremantle said of Kelly’s case being resolved outside of court. “I think if you’re looking at this file, you see that it could have been dealt with in the same manner a long time ago.”
Jonah Kelly declined requests for an interview.
However, NTI officials who have been helping in the Kelly’s case, as well as the two remaining cases, said there would be more conflict between ratepayers and the city unless the current tax structure is changed.
Kowesa Etitiq, a policy analyst for NTI, echoed the call to change the city’s compound interest rate on outstanding debts. Etitiq said in one case, a homeowner originally owed less than $30,000 but saw that climb to over $120,000 under the current rate structure.
“They should reduce the rate to something like 4.5 per cent (per annum),” Etitiq said. “Not 22 per cent, I think that’s criminal.”
Etitiq suggested the previous council’s decision to try auctioning off the houses of deliquent taxpayers was partially to blame for lack of progress on the city’s back taxes file.
“The previous council was unbending,” he said. “They didn’t want to look at solutions. They just wanted to proceed on the path they had chosen.”
Iqaluit’s current city council is expected to review a request to the territorial government to amend the Cities, Towns and Villages Act as early as Nov. 25.