​Council to Consider Interest Free Tax Payment Plan

At the Committee of the Whole on Wednesday, April 7, City Council will consider a plan that will allow residents to pay their taxes on a monthly basis interest-free and not require payment in advance.

Under the new proposal, residential taxpayers who sign up for preauthorized payments could pay their current taxes out over a one-year period, interest-free.

Currently, individuals who want to avail of an interest-free monthly payment option using preauthorized payment must pay their taxes in advance. These taxpayers accumulate a credit balance in their account with the City so that no interest is charged when taxes are due.

If approved by Council, the interest-free tax payment plan would eliminate the need to pay taxes in advance and hold a credit balance with the City, so long as the property owner signs up for preauthorized payments.

The City of St. John’s has approximately 40,000 residential accounts:

• approximately 2,800 accounts pay in advance, interest-free.
• 2,000 accounts make monthly payments, with interest applied.
• 17,000 accounts have payments made by their financial institution, interest-free.
• 18,200 accounts pay directly to the City, either in full annually or when bills are remitted; late payments in these accounts are subject to interest. 

Council asked staff to explore an interest-free payment plan to provide taxpayers with payment flexibility and relief from having to pay interest. The preauthorized payment plan option would also allow residents to smooth their cash flows without having to make significant lump sum payments twice a year.

While adopting this program would mean lost revenue in interest for the City, it is not expected to materially impair the City’s finances and, more importantly, will help residential property owners.

Commercial taxpayers are not eligible for this program. Commercial owners are billed quarterly in advance but are given four months to pay; for example, their January bill is not due until April 30. In addition, the filing of vacancy allowance claims would make use of a standard monthly payment more difficult to process and manage.

If approved, the program will come into effect as of this month. Residential taxpayers who pay in advance or pay monthly with interest will see an adjustment in their payment schedules; interest will be no longer be charged. Due to the volume of manual adjustments required the City may not have all accounts completed before April payments are withdrawn.