N.B. property tax changes target municipal revenue windfalls fuelled by soaring assessments
Saint John mayor calls proposed changes a disappointment
A complex new formula introduced for calculating property taxes in New Brunswick will loosen the connections between residential and non-residential tax rates in municipalities and automatically lower rates when local property assessments rise.
That will end the practice of municipalities treating rising property values as revenue windfalls and make the property tax system fairer, according to long-promised reforms introduced by the Holt government Wednesday.
“This legislation will help us set the foundation for a property tax system that is more transparent, predictable and stable, starting in the 2027 taxation year,” said Local Government Minister Aaron Kennedy.
The biggest change being made is a provision that will automatically lower a municipality's tax rate if the value of assessments in the community rise by more than the rate of inflation in a given year.
A municipality in need of extra money can raise its tax rate back up if it chooses but only after the elected council votes publicly to do that.
Quispamsis
enjoyed a revenue windfall in 2025 when it lowered its tax rate by less
than two per cent despite a large increase in town assessments. The
province said from now on municipal councils will see rates lowered
automatically when assessments spike. (Town of Quispamsis)The change reverses what happens under current rules where rising assessments produce rising tax revenues in a community automatically unless a council takes action to lower its tax rate, which many have been slow to do.
As an example, in 2025 the Town of Quispamsis watched its tax base grow 10 per cent. It did lower its tax rate in response but only by 1.4 per cent.
As a result, the town enjoyed a 2025 revenue windfall of eight per cent, about four times the rate of inflation that year.
Mixed reactions to N.B. property tax changesKennedy, who used to run Quispamsis as its administrator, was not involved in that particular decision but said in the future passive revenue increases caused by councils doing little to counteract climbing assessments will be discontinued by the new formula.
He said any municipality with a large assessment jump will see its tax rate lowered by the province in an automatic discount councillors will have to vote to override if they choose.
"When assessments go up, the tax rate should come down," said Kennedy.
"[The municipalities] can make the decisions that they deem best for the tax rate in their community, but they are going to have to justify that in an open and transparent way."
A second reform will allow municipalities some limited room to lower residential tax rates without being forced to lower commercial and industrial rates by equal amounts.
Currently in New Brunswick residential tax rates cannot be set by municipalities more than 41 per cent below commercial and industrial rates. Kennedy said that limit is being increased to 50 per cent lower.
Saint
John Mayor Donna Reardon said she was disappointed with changes
announced to the property tax system by the province. Saint John wanted
more freedom to tax heavy industry as it sees fit, but industrial and
residential rates, although loosened, remain connected. (Nipun Tiwari/CBC)The change falls well short of municipal calls for the province to separate residential tax rates from industrial and commercial tax rates completely.
Saint John Mayor Donna Reardon said the incremental change is a disappointment.
"It's not what we wanted," said Reardon in an interview.
"I don't see this as a strengthening exercise for municipalities."
Young
families in new homes, like in this Saint John house, are excluded from
provincial government assessment protections and are made to pay up to
30 per cent more property tax than their neighbours. (Submitted by Emily Arsenault)On another issue — the uneven distribution of tax burdens in municipalities caused by assessment protections granted to most homeowners but denied to others, including young people in their first homes — there were no changes.
A 260-page expert report commissioned by the province to look at problems in its assessment system flagged the issue as having been raised by "several stakeholders" it interviewed as an example of unfairness, but Kennedy dismissed the issue as affecting "a small number of people" when asked about it on Wednesday.
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