To better support residents challenged to meet their property tax payments, Lethbridge City Council has approved a reduction in late payment penalties for overdue taxes.
This change will see a new interest rate of 12 per cent on late payments, down from 18 per cent. The City’s Tax Arrears Payment Plan (TAPP) – available to those with overdue taxes – will also see a decrease in penalties from a 10 per cent interest rate to 6 per cent. These changes will take effect for the 2016 tax year and are expected to help more than 2000 property owners each year.
Although still within the Municipal Government Act guidelines, the 18 per cent interest rate has proven to be problematic and sometimes compounds the problem. By reducing the interest rate, the City anticipates more people will be able to pay off their tax bills in a timely manner.
“For the most part, when people are late on their taxes, it isn’t because they don’t want to pay, it’s because they don’t have the means to do so,” says Mayor Chris Spearman. “The high interest rates make it very difficult for them to get caught up and we are hopeful this change will help reduce that burden.”
It’s estimated the reduction in the late payment penalties and TAPP rates will reduce City revenue by $190,000 per year but in turn will help more residents make positive gains on tax debt and prevent properties being put up for auction if taxes are left unpaid.
“We know the Alberta economy is in a downturn and although Lethbridge might not be as hard hit as other cities, we are mindful that it is impacting the entire province. Our City staff work very hard with individuals who are struggling to make their tax payments,” says Councillor Rob Miyashiro. “By reducing tax penalties, we can be even more proactive in helping residents avoid the debt issues we see in these difficult times.”
The 18 per cent penalty rate has been in place since the 1980s for the purpose of encouraging tax payers to complete payment of their annual property taxes before the June 30 deadline.