We know taxes are going up in Nipawin – the town needs to increase its tax levy by four per cent. We don’t know how that’s going to hit local pocketbooks.
The issue at hand is making sure everybody is paying a fair share and isn’t overburdened – a hard task when the ways council can collect taxes is limited.
There’s the base tax, which is a flat tax that’s applied to every property owner equally. The problem with it is it doesn’t take into account a property owner’s ability to pay.
Then there’s the mill rate, which is based on the proportion of the value of a property. Depending on the classification of property that’s owned, a multiplier – a mill rate factor – can be applied that either decreases or increases the amount of tax that needs to be paid. Commercial properties in towns tend to have multipliers that increase the final tax bill. The problem with the mill rate: it assumes that property value reflects the ability to pay.
Towns cannot use income tax, which directly reflects one’s ability to pay, or sales tax, which reflects one’s ability to spend.
Last year, Nipawin’s council chose to reduce the base tax, deciding to rely a bit more on the mill rate. The effect that had was to reduce the proportion of taxes paid by homeowners and raise the amount paid by businesses.
There’s a way that base tax can still be lowered while not affecting businesses – changing the multiplier that business are taxed at.
Nipawin’s council has an unenviable challenge in the next while – establishing a tax rate that’s fair using a system that’s basically pounding square pegs into round holes.
I suspect in the end, not everyone’s going to be happy with what they choose.
