City Hall and council’s blustery response to the Huffington Post Canada online newspaper article, which stated Saskatoon had the highest property taxes of major cities in Canada, was as “squirrelly” as they claimed the article’s content to be.
The article was based on numbers crunched by The Real Property Association of Canada (real.pac) which, according to its website, is a national organization dealing with property investment and has been in existence for at least seven years. (The cost of downloading the full report was more than I was willing to pay, so I will deal with numbers provided in the article itself and the City’s response.)
Real.pac caters to businesses looking at total tax on any land/buildings which may influence an investor when buying property in any city. In the case of Saskatchewan, our property bills include an education tax that is either not assessed against property in some other provinces, or assessed at a lower rate. City assessor Les Smith states that the actual municipal tax on an average home in Saskatoon is $3,108, rather than real.pac’s number of $4,440. If you hive off the 39.99 per cent allocated to education tax, and add on the 5.52 per cent for libraries, the numbers are not that far apart. The fly in the ointment may well be that real.pac seems to be basing its numbers on current average house prices, rather than current assessed value.
The City complicates the issue by throwing in red herrings. First it says you can’t compare tax rates to other cities, because each may use a different formula to determine assessment, and then proceeds to compare our rates to other cities. Of particular note was the 2012 Calgary study showing we had the lowest tax rate at $1,235 per capita. (That would be before the 2013 increase and the seven per cent increase in 2014.) It is unknown as to whether special levies are included in both the Calgary study and real.pac numbers.
Is the 2012 Calgary report, with a per-capita number of $1,235, what we do spend on each man, woman and child living in the city? Why is it important to use per-capita figures when, in fact, we tax on values of land and buildings and not the number of residents? If we use a per-capita formula, would it mean that if you live alone then anything over the $1,235 is what you pay to subsidize less affluent residents? Or, since we know the cost per person, should we be looking at a flat tax where each of us pays the same for services rendered? That’s not going to happen, but it is as silly as the rest of the diatribe around this matter.
Coun. Tiffany Paulsen says it is unfair to include education and library tax in the equation when doing comparative tax rates. While I might agree on the education portion, she is off base on the library tax. Each of the cities flagged in this article support public libraries. Each of the cities uses property tax to support their libraries. Whether you separate the library portion from the rest of the municipal tax or include it with the general assessment, it is still part of your municipal property tax bill. The libraries are owned and operated by the City, and supported by property tax.
The library board submits its budget to the city for approval in the same fashion that the police department does. But unlike the libraries, we do not separate the cost of policing from our general municipal taxes. Maybe we should. If the City can determine that 5.52 per cent of tax is for libraries and state a dollar amount, why not indicate how much of the property bill is spent on policing, fire, recreation, roads, sewers, debt and interest on debt, and so on. Forget the pie or bar charts; let’s talk percentages and dollars. The easy response by the City is “read the budget,” but not many of us are forensic auditors.
If you really want to know how your property taxes compare to other cities, take your total tax bill, discount 39.99 per cent for the education portion, and whatever amount left is what your municipal tax really is. Then you can compare that amount to what Calgary ($2,830) or Edmonton ($2,947) pays, where I understand education funding is a provincial responsibility. (Our scenario gets worse if, in fact, those Alberta cities did pay education tax on property.) However, you should also include extra levies and compare services delivered in each city. And remember real.pac numbers are based on real-estate values/sales rather than 70 per cent of government-assessed value. Compare the value of your house in Saskatoon to the cost of an equivalent home in Calgary or Edmonton.
During the next week or so, the City will respond with a report on mill-rate factors, classes of residences and the differences between the cities and services offered. The blah, blah, blah will no doubt cause most taxpayers to zone out. We will hear little about dollars or cents/sense.
When all is said and done, all cities seem to have developed convoluted formulas to confuse taxpayers and prevent comparisons to each other. But if we are not the highest-taxed city today, we are well on our way to being that.