Municipal Capacity

Municipalities play an important role in providing local services across PEI.  Municipalities are facing increasingly complex responsibilities and expectations from their residents and from provincial and federal governments.  In many areas, there is limited capacity to meet expectations.  Services are being provided at different levels, standards and costs across PEI and are used by municipal residents and non-residents alike. 

All communities are facing challenges such as population shifts, infrastructure demands, environmental concerns and climate change impacts. 

There are opportunities for communities to work together to create stronger municipalities to address challenges and build capacity to respond. 

Why are larger municipalities being encouraged?

Strong municipalities will be able to deliver quality services to their residents and to deal with the challenges that communities and rural areas are facing. 

Larger municipalities have the base needed to ensure active elections, the people needed for projects and committees, and the population to make even basic services affordable. 

Sharing the costs across a larger population means municipalities will be better positioned to provide services to residents, to develop programs and initiatives, to attract investment opportunities, to promote economic growth, and to access funding programs. 

How can living in a municipality benefit me?

Local governments provide great tools to improve the quality of life for their residents.  A municipality provides people with a local voice and the means to promote local initiatives and priorities that are important to the people in that area.

Many services that Islanders count on everyday are best provided at a local level.  Stronger municipalities will have the ability to provide the standard of services that their residents expect.  Combining the resources of existing municipalities can remove duplication – this can result in cost savings for the larger area or simply ensure that services work better.

Towns and rural areas benefit from working together to attract opportunities and investment for their area.  Municipal councils provide a framework to address many of the challenges we face. 

What services can municipalities provide?

On PEI, municipal governments must provide: administration, fire protection, emergency management, and land use planning.  Municipal governments, especially larger municipalities, should be well positioned to provide additional services such as: recreational programs and facilities, parks, animal and fly control, libraries, water and wastewater, economic development, and tourism and cultural activities.

Why should I pay for municipal services I do not use?

Many services that benefit a wider area are used by residents and non-residents of municipalities, such as: parks, rinks, trails, land use planning, emergency planning, libraries or community halls. 

Services, such as land use planning and emergency planning, are provided to protect broader public interests such as health and safety, water quality and protection of resource land or natural areas. 

All municipalities must ensure their residents receive fire protection.  Some municipalities own their fire departments while others purchase fire services from private companies or another municipality.  If you live in a municipality, the cost of fire protection is included in your tax rate. 

When you live outside of a municipality, you pay fire dues through a fire district committee (this is identified on your property tax bill). 

I live in a rural area and already pay for my own well and septic system.

Sewer and water services are utilities and are funded by user fees.  These services are not part of a municipality’s tax rate. 

I own a large amount of land – how will municipal taxes affect me?

Farmers and property owners who rent or lease to farmers may be eligible for both provincial and municipal property tax credits. 

Some municipalities on PEI offer rebates for farmers, but this is separate from the property tax.  

How will my taxes be affected by municipal restructuring?

It is difficult to assess how individual property tax bills will be affected by municipal restructuring because of varying tax rates and property assessment levels. 

Municipal tax rates vary across the province depending on factors such as municipal services, the total assessed value of all property within the municipality and the population living in that municipality.

Property tax rates are applied to the assessed value of your property to determine the property taxes due.  Assessment levels vary by municipality.  Some municipalities have higher individual property assessment values and a higher total assessed value for all property, so they may be able to charge a lower tax rate to generate the revenue needed to provide their services. 

Another municipality may have lower individual property assessment values and a very low total assessed value for all property so they may need to charge a higher rate to generate the same revenue (see example below). 



Non-commercial municipal tax rate



Assessed value of a similar residential property




($75,000 / $100 X $0.60) = $450

($150,000 / $100 X $0.30) = $450

A Municipal Growth Management Study can consider a range of service and taxation options and provide different taxation scenarios.  A differential tax rate system based on services could encourage a fair approach.

One of the “best practices” being recommended to municipalities is the use of differential tax rates to establish different tax rates for specific areas within municipal boundaries.  This allows the municipality to set tax rates based on the level of services provided within specific areas. 

For example, a base rate could cover wide-reaching services like administration, recreation, land use planning, libraries, emergency planning and fire services.  Higher rates can be set for the areas receiving services like additional police protection, sidewalks, or street lighting.

Differential tax rates could allow the taxation system to reflect the services available.

Where can I get more information about property taxes in PEI? 

Visit Property Taxes and Charges for more detailed information about property tax and assessment. 

How can I participate in conversations about municipal restructuring?

There are formal requirements for municipal restructuring processes outlined in the Municipal Government Act.  These include public notifications and public meetings.  Visit the Municipal Restructuring page for more information.    

Public engagement is a critical part of the restructuring process and municipalities should provide many opportunities for individuals to provide input if restructuring is being considered.

Why should I participate in municipal restructuring conversations?

It is important for municipalities and communities that are thinking about restructuring to talk to residents and share information.  By being involved in the process you have an opportunity to provide valuable input.  It is also an opportunity to ask specific questions that are important to you.

What happens to local community names?

Geographic place names will not change.  Place names and identity can still be used and recognized within a new municipality. 

Land use planning is another way to recognize the heritage of your area.  Public consultation allows people to have a voice and set the direction for development within their community.

How will my community’s interest be looked after if we join a larger municipality?

New municipalities may establish electoral wards to allow an equitable distribution of population.  Municipal politicians are elected to represent the interests of the municipality as a whole. 

Are there more restrictions in a municipality?

Living in a municipality is not necessarily more restrictive than living in an unincorporated area.  A lot depends on the priorities and objectives of the people in the municipality.

Municipalities do have the authority to establish bylaws to meet the needs of citizens and resolve issues.  Bylaws can address matters such as: public safety; protection of public and private property; nuisances and unsightly premises; services; and animal control, black fly or mosquito control.  

Whether you live in a municipality or not, there are rules and regulations related to land use and development and permits are required regardless of where you live.   

Municipal land use planning processes are currently more complete than provincial processes.  Individuals in municipalities with official plans generally have better opportunities for input and more certainty about development.

How can I find out about my municipality?

Some municipalities have a website to keep residents informed.  In other areas, you may have to contact the Chief Administrative Officer (CAO) for specific questions or concerns. 

Municipal Directory

Note: This page is prepared for information purposes only and should not be relied upon as a substitute for specialized legal or professional advice.
Published date: 
November 26, 2021