Collectors’ Corner

The Psychology of Property Taxes

I’m not a psychologist. I was a humble tax collector who had the opportunity to observe people’s behaviour, particularly when it came to property taxes. When a homeowner receives their property tax notice, they might say “Well, my municipality is a good place to live. I get good value for my money. And a small tax increase is understandable.” However, another reaction might be “What! I can’t believe this tax increase! What am I getting for my money?” No one really likes to pay taxes, but if they include their property taxes with their monthly mortgage payment or we encourage them to enroll in the monthly automatic withdrawal option, then paying taxes doesn’t seem to be that bad—out of sight- out of mind.

And then there’s tax sale. Tracking down delinquent taxpayers can be a real challenge and when you do their reaction may be one of shock, guilt, embarrassment, or fear.

Let’s look at the tax sale advertisement. The ad serves several purposes. It is a legislative requirement, a method of contacting the owner and a notification to the general public of the potential tax sale auction. The challenge is what size to make the ad and where to place it in the newspaper. If a large ad is placed on page 2, then it will get more attention than if it was a small ad on the second last page. The ad can be a full page even if there are only a few properties subject to tax sale. That certainly would attract a lot of attention, with the commensurate phone inquiries “What is this tax sale that you’re advertising?” and potentially a large attendance at the auction. A small ad on the back page would hardly get any attention and defeat the purpose of trying to contact the owner.

So, is our purpose to attract a lot of attention for the auction in order to raise the bid price (surplus) in favour of the owner? Or on the other hand, is it to discourage third-party purchasers so that the municipality will be the default purchaser which could be in favour of the owner? Also, many people have clued into the provision of getting interest on their “deposit” if they don’t obtain the property—for a fraction of its value. The tax sale auction is also required by legislation. What rules of the auction are you going make such as: will you accept an uncertified cheque from the purchaser, or when must payment be made? What is the method of auctioneering: three calls on a final bid with the bid raised by the bidders or suggestion (incremental) bidding? The rules of auction that you determine will affect how people behave.

These are just a few examples of how property taxes affect people’s behaviour. But I must say that dealing with taxpayers was the best part of being a tax collector.

DOUG STEIN has worked in municipal finance for over 30 years. In 2011 he retired from his position as Manager of Revenue Services for the District of Saanich. Doug leads the Collectors’ Forum, is a GFOABC Life Member, and a CPA, CMA.