A new report from the Canadian Federation of Independent Business says Estevan has one of Saskatchewan's fairest property tax ratios.
Released last week, the report placed Estevan ninth when it comes to calculating the ratio between residential and commercial property taxes. According to figures included in the extensive report, Estevan business owners in 2010 paid $3,277 in taxes on a business with an assessed value of $200,000. In comparison, a homeowner paid $1,444 on a residence with the same assessed value, a difference of $1,783 or a ratio of 2.27.
Overall, the report, titled WANTED: Property Tax Fairness, said there has been very little progress in narrowing the property tax gap in Saskatchewan where, on average, small business owners paid 2.25 times more taxes than residential property owners.
"Unfortunately for small business owners, the vast majority of the province's municipalities saw their municipal tax gaps either worsen or stay the same in 2010," said Virginia Labbie, CFIB's senior policy analyst for Saskatchewan and Agri-business. "It is troubling that only 17 out of the 63 municipalities improved their municipal tax gap in 2010."
Although Estevan's ratio remained virtually unchanged from 2009 to 2010, it did improve in the overall rankings as the last time the CFIB released a similar report the Energy City ranked among the least fair cities, a fact that did not sit well with civic officials who felt the report was misleading.
Mayor Gary St. Onge said although he takes the report with a grain of salt, he was happy to see the City's effort to close the commercial-residential gap was bearing some fruit.
"That is one of the things we wanted to do is make the ratio better," said St. Onge. "We wanted to lower it and we have gotten it down. Two times at least we raised residential and didn't raise commercial to try and get the ratio better."
This time around, the CFIB's sights were trained on Swift Current, which it says has the highest municipal tax gap with commercial property owners paying $4.04 for every dollar spent by residential property tax owners.
Although the report gave them credit for significant improvement, Yorkton was second on the fairness scale with a ratio of 3.85. Weyburn was third worst in the province with a ratio of 3.42 and was also one of just five communities where the gap has worsened since the last CFIB report.
At the other end of the scale, Saskatchewan's newest city is also the fairest when it comes to municipal taxes. Martensville was the runaway leader with a ratio of just 1.59. Saskatoon was second best with a 1.80 ratio while Regina was third at 1.96.
The report also noted that Melville continues to be one of Saskatchewan's highest taxed jurisdictions. Melville's commercial property owners paid $8,238 per $200,000 of assessed property value. It was also the highest for residential taxes at $2,443 per $200,000.
In comparison, Estevan residents have it fairly good when it comes to taxes. The city was second to only Swift Current for residential taxes and fourth in commercial taxes.
The report also included a number of recommendations from the CFIB for both municipal governments as well as the province.
The CFIB feels the province should continue to finance a greater portion of education through general revenues by raising the commercial thresholds and lowering the commercial mill rates. They also called on the province to:
"Cap the Gap" - Cap the difference in the mill rate factor between residential and commercial properties. "Because the property tax gap continues to exist without much concern by municipalities, someone must step in and show leadership. The province should cap the difference in the mill rate factor between residential and commercial properties and introduce a long-term strategy to phase out the mill rate factors all together," the report said.
Reject any proposal that would provide increased taxation powers to municipalities. "While we recognize the fiscal pressures Canadian municipalities face, we are opposed to them gaining authority for new sources of revenue such as municipal fuel or hotel taxes; or even a sales or income tax. In the minds of business owners, many local politicians have not been able to use the property tax system fairly, so there is little trust that they could reasonably administer any additional taxes. It must be remembered that while there are three levels of government, there is only one taxpayer."
Reject calls for provincial tax increases to finance municipal infrastructure (e.g. Vehicle tax). An additional tax is unnecessary and governments should use the existing funds more efficiently and effectively.
With respect to municipal governments, the CFIB says it is clear there is no appetite for property tax increases given the record revenue-sharing Saskatchewan municipalities will receive in 2012.
Because of that the CFIB urges municipalities to consider and act on the following:
Develop and implement a plan over time to reduce the commercial-to-residential property tax gap.
Limit year-over-year spending growth to a maximum of inflation plus population growth and ensure the funds from the province's Municipal Operating Grant are used prudently. Recent spending by municipalities has exceeded levels necessary to keep pace with population and inflation growth. Local politicians should actively seek ways to deliver cost savings in the provision of municipal services.
Review current programs and services with a view to identifying programs and service areas that can be eliminated, streamlined, contracted out to the private sector, or sold.
Introduce a plan to reduce the size and cost of the municipal civil service.
Introduce a plan to reduce the size of the civil service (primarily through attrition).
Develop a long-term strategy to narrow the wages/benefits disparity (20.9 per cent) between public and private sector employees.
Work towards additional revenue sharing, rather than new taxing authority.
Consider the introduction of a base tax for all homeowners. When surveyed, 70 per cent of small business owners agreed a base tax for basic core services should be implemented for all homeowners.
