City defends new service charge

Dave Bartlett
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Councillor suggests people may already be paying for it

Coun. Danny Breen

When the city of St. John's brought down its 2012 budget, it announced it would begin to charge financial institutions a new $15 transaction fee when mortgage companies pay property taxes to the city on behalf of homeowners.

While most people in the capital pay their property taxes directly to St. John's, between 15,000 and 17,000 homeowners have decided to pay their city taxes as part of their mortgage.

Many comments on The Telegram's website complained this was simply a hidden tax which would be passed on to mortgage holders.

But Ward 1 Coun. Danny Breen, finance committee chairman said that may not be the case.

"There's a number of cities across the country, larger cities, that (already) charge this transaction fee," he told The Telegram in a recent interview.

"My understanding ... is that banks and mortgage companies apply one mortgage fee across the country, whether you live in ... Saskatchewan or St. John's ... so (the banks) are already paying the $15 to (some cities)," he continued.

Therefore, Breen said he believes homeowners in St. John's who pay their taxes with their mortgage may be paying this fee to their banks, even though St. John's doesn't get that money.

He said twice a year, mortgage companies -including the major banks - pay the city the taxes collected on behalf of property owners for the previous six-month period.

But Breen said city staff are in daily contact with these companies to provide them with the needed information to collect the money, and that takes up a lot of time.

"This has become quite a resource issue for us," Breen said. "These fees are (for the) convenience of paying taxes with your mortgage, so it's not a tax that applies to everybody."

Instead, the councillor calls the new fee an administration charge not a tax.

Anyone who pays their city taxes directly to St. John's, and not through their mortgage, won't be affected by the service fee.

The city expects to collect between $450,000 and $500,000 a year from the banks who collect taxes on behalf of homeowners.

Breen said he's one of those homeowners who has decided to roll his taxes into his mortgage.

When asked why the city made the decision to change the fee, he said staff recommended it.

"Staff said, yes, we've noticed that this is taking up a considerable amount of time so they went and looked at other cities and what other cities were doing," said Breen. "It's not a huge amount of money ... but we're doing a lot of work (on) the banks' behalf and the taxpayers should be reimbursed for the work that we're doing to the banks' advantage."

dbartlett@thetelegram.com

Organizations: The Telegram

Geographic location: St. John's, Saskatchewan

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Recent comments

  • Brad
    January 03, 2012 - 10:29

    Money grap by city hall.....don't you think it is easier to deal with 3-4 banks getting information than 17000 households....City hall must think we are foolish to believe that crap...and Danny Breen won"t miss the fee anyways or absorb it some way we aS simple tax payers cannot realize.....Thanks city hall for the screwing once again.

  • Chris O'Brien
    January 03, 2012 - 10:16

    This is nothing more than a cash grab by the city! Imagine, making those who pay their taxes early or on time pay a fee. Did the city factor in the money lost should people wait to pay? My taxes are paid twice a year by the bank, so why is the city penalizing me for paying on time??? Maybe I should wait until I get a notice saying I am in arrears and then pay. OR is the city hoping to collect more in late fees and fines on top of this Tax. This city used to be a friendly city to live in, I am now beginning to see why so many moves to Mount Pearl and Paradise!!

  • t
    January 03, 2012 - 09:48

    boy, I can't wait for the next election. I can't speak for others, but I'll be doing my part to get rid of most of this council. Here's some advise for anyone thinking of running for council, St. John's taxpayers would like to SAVE some money for a change, we're tired of paying MORE. Always more with this council, time for a change.

  • kent
    January 03, 2012 - 09:05

    Why is there transaction fee.. does the vity have to go through some work to process it? Or did they just pick this one out of thin air without any basis or justification?

  • MBC
    January 03, 2012 - 08:08

    This fee should help pay for the Mayor's trip to Florida every year to attend a so-called cruise ship convention.

  • Doug
    January 03, 2012 - 03:12

    I think all the people working out west need a tax break on their flights back and forth every month. Spend 12000 dollars a year to fly back and forth. We should get a tax break on that because all the money we make out west gets spent in nfld. And there is alot of people flying back and forth paying for their own flights. If i was a business paying for my employees to fly i could write those airline tickets off why do they get tax break

  • basilalcala
    January 03, 2012 - 01:16

    It pays to shop around for a mortgage refinance. Mortgage rates have gone down like anything. My brother in law just got a 30-year fixed loan at 3.76% He told me search online for 123 Refinance for the lowest rate.

  • CFA
    January 02, 2012 - 20:12

    It's a sneaky hidden tax, and just because it is done elsewhere doesn't make it right. My taxes (insane $4000 a year) are hard to pay in a lump sum. I'm not poor, but I am not rich either. Fifteen dollars to the rich wouldn't matter, but they can afford to just pay the tax, so probably won't have to. The people who can't afford to pay it all at once get hit with the extra fee.

  • Val
    January 02, 2012 - 17:10

    Great Penalized for paying our taxes on time..... totally cracked.... way to go council!

  • Nancy
    January 02, 2012 - 15:14

    How is this fair? It is almost as if you are punishing those homeowners who pay their tax through their mortgage. You can't just isolate one population. If you are going to impose this - it should be done across the board. Also, I would like to know exactly what you will be doing with this money once you have received it.

  • starr
    January 02, 2012 - 13:58

    Yes, it is a money grab - and an underhanded one at that. Why is it legal that ways to grab money can just be dreamed up like that??

  • frank r
    January 02, 2012 - 13:37

    I guess if "staff agrees " Dan that it takes too much time to plough the streets then you will start charging people a fee to plough the streets because it takes time. Its a tax grab and nothing else can it be called. Time for us HIGHtaxpayers to fight back. Oh ya and we will play for Dan's and rest of councils screwup at the sewage treatment plant. More dollars for the city to rob from the poor citizens.

  • Eli
    January 02, 2012 - 12:15

    I just love Danny's logic; "We're doing work on the banks' behalf so taxpayers should be reimbursed....". Yes b'y, taxpayers are being reimbursed by paying another tax to do it. Danny, you should have stuck with baking cookies.

  • Turry from town
    January 02, 2012 - 10:15

    No matter what kind of spin you put on it Danny,the majority of people pay their property taxes through the banks because it is hard to come up with that kind of money twice a year in a lump sum.I guess staff realized that and you decided this would be a good revenue generator.But it is still a tax or a fee.How long before you increase that as well.You people need to come up with ways to save the taxpayers money,not ding them for something else.Shame on you and that council!

  • jim
    January 02, 2012 - 10:00

    Staff said, are these Danny's words and is he trying to justify the new fee? If these are the words of the staff then some of them may be out of a job because they are not doing the banks work any more. Guess another fee is probably going to be charged by mortgage companies. Good work Danny or staff?

  • Randy from the ROCK
    January 02, 2012 - 09:23

    What about the Bus service, I do not use that either. Those new bike lanes that you just painted, in fall/winter I might add, I guess they will need new paint in the spring. Get you act in order because I do not use those either and I am a tax payer in St. John's. Doc is driving me to Paradise. Get your house in order.

  • Randy from the ROCK
    January 02, 2012 - 09:16

    Won't take Visa as payment, now charging extra 15 dollars transaction fee..... I think that all tax payersshould be charged or none at all. What about that 311 service, who uses and pays for that.... I do not so deduct that from my taxes....Lets get Andy Wells back at least he is fair to all.

  • bell
    January 02, 2012 - 08:06

    sounds like a money grab to me.