Using Tax Exemptions to Encourage Conservation
In the early 1990s, property values in the islands rose
dramatically. Some long-time residents struggled to keep up
with the resulting rise in property taxes. Owners of large,
natural properties were faced with the difficult choice to sell
their land, or subdivide or log the land to help cover the
Concerned that the trend in rising property values might trigger
a major loss of ecosystem values in the islands, the Islands Trust
searched for a way to encourage private land conservation.
Property owners in B.C. are rewarded for forestry and agricultural
activities with property tax exemptions. The Islands Trust
proposed using property tax exemptions to reward land
Properties left in their natural state put few demands on
taxable services. In fact, natural ecosystems give back to
their communities, providing clean water and air, wind and noise
breaks, and beauty to the properties around them. A property
tax exemption for conserving natural values compensates people for
providing a benefit to their community.
NAPTEP (Natural Area Protection Tax Exemption Program)
NAPTEP is a conservation tax exemption program offered by the
Islands Trust and Islands Trust Fund. NAPTEP provides an
annual tax exemption of 65% of the assessed value of land protected
with a conservation covenant. By encouraging landowners to
protect land with covenants, the program assists local governments
in achieving their goal to protect ecosystem values without the
need to spend tax revenue to purchase the land.
To apply for the tax exemption, a landowner registers a
conservation covenant with the Trust Fund Board on their property's
title, permanently protecting the natural values on their
land. With a covenant on the property, the landowner is then
eligible to receive a Natural Area Exemption Certificate from Trust
Council, providing the tax exemption for the portion of land
protected by the covenant.
Legislation, Regulation, and Policies
The Islands Trust's power to provide property tax exemptions for
conservation is provided in section 7.1 of the Islands Trust Act.
The Act outlines which taxes NAPTEP provides exemption from, how a
tax exemption certificate is issued, and the penalty if the
covenant is breached and certificate cancelled.
The Islands Trust Natural Area Protection Tax
Exemption Regulation identifies the types of natural values and
amenities eligible for the exemption program. They include
areas relatively undisturbed that are:
- good examples of important ecosystems such as forests over 80
years old, woodlands, water features, sparsely vegetated natural
areas, coastal bluffs, etc.
- key habitat for native plant species or plant communities
- critical habitat for native animal species in relation to
breeding, rearing, feeding or staging
- special geological features
The Act requires the Islands Trust seek the agreement of each
regional district board before implementing NAPTEP on the islands
in their jurisdiction. The following Trust Council bylaws
identify these agreements and the islands eligible for NAPTEP:
Islands Trust Council Bylaw No. 115 prescribes
the fees for issuing Natural Area Exemption Certificates. Trust
Council Policy Administrative on Natural Area Protection Tax
Exemption Program sets out the application process for the
program and authorized covenant holders.
To qualify for NAPTEP, a landowner must protect natural features
on their land with a conservation covenant. The Islands Trust
Fund created a standard covenant with minimum requirements needed
to enter into the program. View the Annotated Standard Covenant for NAPTEP.
Financial Implications of NAPTEP
The tax exemptions available through NAPTEP do not decrease
government taxation income. To compensate, exempted taxes are
shifted to other taxpayers in the tax jurisdiction. This
practice is the same for other tax exemption programs (e.g.
Homeowner Grants, Agricultural Land Reserve exemptions, Heritage
property exemptions). Because taxes are shifted not just to
other island property owners, but throughout regional districts and
the province, our experience with NAPTEP is that for each new
landowner who joins the program, non-NAPTEP property owners see an
increase in property taxes that amounts to pennies at most.
For more information, read Hypothetical Tax Shift in the Thetis Island Local
Trust Area (Cowichan Valley Regional District)
Property Tax Incentive Programs in Other Jurisdictions
In 2008, the Province of Nova Scotia implemented the
Conservation Property Tax Exemption program. The program
exempts a landowner from paying property taxes on the portion of a
property protected with a covenant (easement). The program
also provides a grant to municipalities in lieu of taxes to
compensate for lost revenue. For more information, visit the
Government of Nova Scotia.
In 2009, the Province of Ontario introduced the Conservation
Land Tax Incentive Program. The program provides tax relief
on properties identified by the Province as having eligible natural
features. A covenant is not required, but applicants must
prove the land is in a natural state. Applicants must apply
for the program each year to receive the tax exemption. For
more information, visit the Ministry of Natural Resources.