The Canadian Federation of Independent Business (CFIB) released their annual property tax fairness report on Thursday, and it shows the property tax gap for the city of Estevan continues to grow.
According to CFIB, commercial property owners paid $3,652 in municipal property taxes last year per $200,000 in property value, while residential owners were assessed $1,109 per $200,000 in property value.
CFIB then divides the commercial property tax by the residential property tax to determine the property tax gap number. Estevan was 3.29, which left them 14th out of 15 Saskatchewan cities.
Only Prince Albert, with a gap of 4.2, ranked below Estevan among the cities. Martensville had the best gap at 1.50.
Estevan ranked ninth among Saskatchewan cities for their municipal property tax bill, and fifth among the cities for their residential levy.
As for overall property tax numbers, which factor in the education portion of property tax, commercial property owners in Estevan paid a total of $5,308 per $200,000, while homeowners paid $1,813 on a home worth $200,000, for an overall gap of 2.93, which again ranked Estevan 14th out of 15 cities.
Marilyn Braun-Pollon, the vice-president of the Prairies and agri-business for CFIB, said the tax fairness document requires a lot of time, as they evaluate the property tax gaps for all urban and rural municipalities with a population of at least 1,000 people.
“We collect the information that is provided in the mill rate survey to the Ministry of Government Relations. We take all the data, and then we look at comparing commercial versus residential properties,” she told the Mercury.
Braun-Pollon said the information provides a clear picture of which municipalities do a good job at keeping their commercial property taxes low.
“Business owners continue to pay more than their fair share, and continue to get the short end of the property tax stick,” said Braun-Pollon. “So we want to raise this issue to … commend those communities that are doing a better job than others of making their municipal property taxes fair for small businesses, but we also shed light on those municipalities that can do better in reducing that gap between commercial and residential properties.”
Braun-Pollon believes the provincial government needs to do their part to reduce the tax gap. Not only does CFIB suggest that municipal governments consider reducing spending, trimming the civil service through attrition and implementing a base tax, they would also like to see the province provide more funding for education and freeze municipal revenue sharing.
Braun-Pollon noted that cities have received a 153 per cent increase in revenue sharing since 2007.
“They keep saying they have a revenue problem, but it’s clear they have a spending problem,” said Braun-Pollon.
The CFIB is concerned municipalities may continue to hike property taxes to continue what they view as unsustainable spending.
Business owners have used the findings to lobby local governments in the past, she said, and municipalities have used the data as a marketing tool for their communities.
While they would like to see commercial properties pay the same as residential properties, the CFIB is happy when municipalities take action to reduce their property tax gap.
She cited Saskatoon as a city that has a plan to help them reduce their tax gap. As for Estevan, there is work that has to be done to reduce the tax gap.
Jeff Ward, who is currently Estevan’s city treasurer and the acting city manager, said council has been raising the mill rate to create revenue sources for infrastructure and operating needs, but commercial properties have been taking on more of the property tax burden.
“I think everyone on council knows now that we need to get a more focused approach on residential and commercial to bring that gap down,” said Ward.
Council will ultimately decide, during the upcoming budget deliberations, whether they want to ease some of the property tax burden for businesses.
The City of Estevan has had varied results in the report over the years. A few years ago, when council was making an effort to reduce commercial property taxes, Estevan’s property tax gap was as low as 2.24, which left Estevan with one of the lowest gaps in the province.
But in the last three years, the city’s gap has risen, and their ranking in the province has slipped. Estevan was 13th in 2013 with a property tax gap of 2.83.
Ward believes location is one of the biggest factors in determining whether a business will come to the Estevan area. He expects the property tax gap usually wouldn’t be a factor.
“As you see, compared to the other cities, we are relatively in the middle of the pack for our actual commercial rates, it’s just that the gap between residential and commercial is a bit high,” said Ward. “Obviously, being the fifth-lowest on residential, there’s obviously some room so that any increases can try to be transferred to residential going forward.”
CFIB’s report was kinder for the Rural Municipality (RM) of Estevan. The municipal commercial assessment for a property worth $200,000 was $1,800, while the residential assessment was $1,008, for a property tax gap of 1.79, which left them 12th out of the 32 RMs with a population of at least 1,000 people.
“It’s certainly a distinguishing difference between the city and the RM,” said Braun-Pollon.
As for total property taxes, the commercial assessment was $3,456 and the residential figure was $1,712, for a total gap of 2.02, which was also good for 12th.
Grace Potter, the administrator for the RM of Estevan, said nobody is happy to pay taxes, but it’s reassuring when they receive a report like the one from the CFIB, which shows they are among the better RMs in the province.
“I was surprised with some of the RMs that were on the high-end,” said Potter. “With some of them, I don’t know if there’s extenuating circumstances, but some of them were pretty high, a lot higher than expected.”
The CFIB has released the property tax fairness report for the last eight years. It has evolved to include all municipalities with a population of at least 1,000 people.
