Tax deadbeat crack-down stirs debate in Iqaluit

ODILE NELSON

Iqaluit city council has come under scrutiny for its decision to auction off the properties of its worst property tax offenders.

Last week, council voted to sell off 13 residences and four businesses properties whose owners owe the city an accumulated $612,000 in unpaid property taxes.

If Iqaluit council goes through with the auction, it would mark the first time the city has followed through on the drastic threat.

The Nunavut Gazette was to publish the names of the 17 offenders today. The city was also going to release the names of all persons who owe the city back taxes in excess of $500 in this week’s local newspapers.

But since the decision to auction the 17 properties was made public, some politicians has been questioning the city’s move.

Earlier this week, Cathy Towtongie, president of Nunavut Tunngavik Inc., spoke to CBC Radio, saying the proposed sale took her by surprise. She also said the southern tax system is foreign to Inuit.

Towtongie said she would consider helping those beneficiaries who are threatened.

“So many people being evicted in one day, and in the fall that’s why we’re taking a very, very close look and if NTI has to do something, if it has the capability to do something, we will do something,” she told CBC.

At the same time, Jack Anawak, MLA for Rankin Inlet, wrote a letter to Nunatsiaq News this week expressing his anger at the situation.

“This is to me a matter of great injustice especially for those who are either original Iqalungmiut, or at least, long-time Iqalungmiut,” Anawak’s letter reads. “Is this what we fought for in the negotiations for our land claims, so newly created bodies like the Iqaluit City Council can make Inuit homeless?

Yet despite mounting criticism, John Hussey, the city’s director of finance, said the auction is necessary because it could affect Iqaluit’s five-year capital plan.

“It’s about 10 per cent of our annual tax revenue. We budgeted for $6 million between property taxes and grants in lieu, meaning government money that comes in from the territorial and federal government buildings. So we have 17 people who owe us 10 per cent of the tax money on an annual basis,” he said.

The missing revenue could lead to a slow-down in the growth of water, sewer, garbage and road programs, he said.

Though some people may be shocked to hear of the proposed tax sale, Hussey said the threat is not entirely new.

In 1999, the town published a list of 45 individuals who were behind in their payments. The unpaid property taxes ranged from $71,871.23 to $616.39. Altogether, the back taxes totaled $500,194.80.

Last year, the amount had grown to $1.3 million in overdue payments. The 2002 bill, however, dropped by about half after many of the tax delinquents settled their tabs.

And since last week’s news, Hussey said, one person has already come into his office and settled the amount owing in full.

The average annual rate for residential property taxes varies between $3,500 to $4,000 for an average size home and lot.

Taxpayers, however, run into problems because of the city’s high compound interest rate applied to unpaid amounts — a steep 18 per cent a year.

“As time goes by, it’s like a runaway train. The bill is just going to keep accumulating at a faster, faster, faster pace for no other reason than just the massive interest accumulation,” he said.

But lowering the rate would require council to pass a bylaw to forgive debt and interest.

“The problem we run into there is how do you decide who gets interest relief and who doesn’t? On the other side of the coin, although we have 17 people here who are going to be participating in this tax sale, we have approximately about 900 taxpayers who pay interest all the time. Some may go six months over and then have to pay their interest, but they try before it gets too high,” he said.

Hussey said he didn’t hear Towtongie’s on-air suggestion that NTI help beneficiaries pay their tax arrears. But he said the city would welcome any support that would help the listed residents pay their taxes.

The city will sell the properties to the highest bidder Sept. 15. Interested buyers must submit a bid of at least 50 per cent of the assessed home value.

But once the property is sold, the original owner has 30 days to reclaim the property by repaying their taxes, interest, penalties and the city’s collection costs.

Owners also have the right to challenge the sale of their property for the first 30 days after it is sold.