The Town of Bay Roberts hopes some changes to the way it handles interest on overdue taxes will encourage more people to pay off what they owe to the municipality.
At the Tuesday, Feb. 12 regular public meeting, council members unanimously passed a motion to reduce the interest rate charged per month on outstanding balances from one per cent to 0.5 per cent.
Council also agreed to include a change that will allow the town to write off a percentage of interest based on a sliding scale for lump sum payments on balances two-or-more years outstanding. Taxpayers who enter into a payment plan will also no longer be charged interest.
“The main purpose of this is to improve our collection policy and make it a better avenue of collecting our outstanding taxes,” Nigel Black, the town’s chief administrative officer, told council Tuesday.
In a memo provided to council outlining the changes, Black offered an example of how the write off would apply to a hypothetical account with a tax balance owing of $64,000. If $23,500 of that amount was interest charged over a period of years and the property owner agreed to pay the full balance, a 70 per cent write off would be applied, reducing the interest to $7,050.
Black said this will serve as an incentive for people who have fallen behind considerably on taxes to settle their bill in full.
“We think this will make a substantial improvement in encouraging lump sum payments — and we have some big balances out there that are outstanding,” he said.
According to the town’s audited financial statements for 2017, Bay Roberts was owed just over $2 million in taxes. Of that amount, $884,560 was considered doubtful to recover. The interest on tax accounts at year-end 2017 was $677,423. All of those numbers were fairly comparable to the previous year, though the interest on tax accounts had grown by almost $90,000.
As for the decision to cut the monthly interest rate in half, Black’s memo to council noted the town’s auditor had suggested a review of the rate. Prior to 2012, the town did not charge interest on outstanding balances.
Deputy Mayor Walter Yetman, who chairs the finance committee, said the town needs to be creative when it comes to building in incentives for paying off large tax bills. Mayor Philip Wood added that the provincial government has also been actively encouraging municipalities to find ways to improve their tax collection rates.
“Of course, we don’t need government to tell us, because we can do with the money, that’s for sure,” the mayor said.
Interest to write off for full payments on accounts two-or-more years outstanding
• Up to $10,000 — 20 per cent
• $10,000-$20,000 — 30 per cent
• $20,000-$30,000 — 40 per cent
• $30,000-$40,000 — 50 per cent
• $40,000-$50,000 — 60 per cent
• $50,000 or more — 70 per cent