Property Taxes in Saskatchewan

Size: px

Start display at page:

Download "Property Taxes in Saskatchewan"

Baldric Chapman
5 years ago
Views:

Property in Saskatchewan Report # 1: - A Historical Overview, 1985-2000 - News Release

1 Property in Saskatchewan Report # 1: - A Historical Overview, News Release Prepared by: Richard Truscott Saskatchewan Director, Canadian Taxpayers Federation November 6, 2001

2 TABLE OF CONTENTS: Summary of Key Findings Introduction Property and School, Property and School, vs Saskatchewan s Dependence on School The Cause and Impact of High Property Conclusion...12 Appendix #1:

3 Summary of Key Findings Municipal and school taxes have risen much faster than the rate of inflation from 1985 to 2000, particularly for rural areas and the north. In rural areas, for example, school taxes increased at more than twice the rate of inflation over the 15-year period. Table #1: Summary of Property Tax Increases, MUNICIPAL TAXES SCHOOL TAXES TOTAL TAXES INFLATION RATE Urban 65% 65% 65% 52.3% Rural 50% 116% 87% 52.3% Northern 148% 294% 216% 52.3% Total 61% 84% 73% 52.3% Table #2: Summary of Average Property Tax Increases Per Year, MUNICIPAL TAXES SCHOOL TAXES TOTAL TAXES INFLATION RATE Urban 4.3% 4.3% 4.3% 3.5% Rural 3.3% 7.8% 5.8% 3.5% Northern 9.9% 19.6% 14.4% 3.5% Total 4.0% 5.6% 4.9% 3.5% -3-

4 There has been a dramatic shift in the property tax burden from urban municipalities to rural municipalities, starting with the election of the NDP government in For instance, property taxes rose in urban areas by 5.8% per year from 1985 to 1992 and 2.2% per year from 1992 to But property taxes in rural areas rose by 3.9% per year between and 1992 and 5.9% from 1992 to Table #3: Summary of Property Tax Increases, vs Municipal School Total Property Inflation Rate Urban 39% 19% 42% 16% 41% 17% 30.5% 16.7% Rural 13% 32% 38% 56% 27% 47% 30.5% 16.7% Northern 89% 31% 123% 77% 105% 54% 30.5% 16.7% Total 30% 23% 41% 31% 36% 27% 30.5% 16.7% Table #4: Summary of Average Property Tax Increases Per Year, vs Municipal School Total Property Inflation Rate Urban 5.5% 2.4% 6.0% 2.0% 5.8% 2.2% 4.4% 2.1% Rural 1.8% 4.1% 5.5% 7.0% 3.9% 5.9% 4.4% 2.1% Northern 11.1% 3.9% 17.6% 9.6% 14.9% 6.8% 4.4% 2.1% Total 4.4% 2.9% 5.9% 3.8% 5.2% 3.4% 4.4% 2.1% -4-

5 1. Introduction This is the first part of a series of studies exploring the rise of property taxes in Saskatchewan over the past 15 years and the impact on taxpayers and communities. The Canadian Taxpayers Federation has argued that tax relief and reform are two of the fundamental keys to Saskatchewan s future growth and prosperity. In spite of the modest tax relief provided by our federal and provincial governments in the past few years, the average family in Saskatchewan still pays about 48% of their income to governments through various types of taxes. Taxpayers need to keep more of their own hard-earned money in their own pockets to support their families, run their farms and businesses, and create new opportunities for themselves and our province. While some kinds of federal and provincial taxes have been going down, property taxes at the municipal level have continued to increase. To balance its books over the past decade, and provide some token tax relief in the past few years, the Saskatchewan government has off-loaded financial obligations onto local government and the tax burden onto local taxpayers. One result is that Saskatchewan now has the highest property and school taxes in the entire country, and the burden is falling most heavily on rural areas suffering from the ongoing agricultural crisis. -5-

6 2. Property and School, There are two components to property taxes in Saskatchewan: the municipal tax portion that goes to fund local municipal government, and the school tax portion that is collected by municipalities but is calculated and spent by school boards. Both parts of the property tax bill have skyrocketed in our province over the past decade and a half. Total property tax revenues for all of Saskatchewan have climbed by 73% from $602 million in 1985 to $1,045 million in 2000 (an average of 4.9% per year). Over the same 15-year period, municipal taxes across the province increased 61% from $276 million to $443 million (an average of 4% per year). School taxes shot up even faster, an increase of 84% from $327 million to $602 million (an average of 5.6% per year). As a proportion of total property taxes in the province, the municipal tax portion decreased slightly from 45.8% in 1985 to 42.4% by School taxes as a percentage of the total property tax bill increased by a corresponding amount from 54.2% in 1985 to 57.6% in a. Urban Total municipal and school tax revenues in urban areas climbed 65% from $389 million in 1985 to $642 million in 2000 (an average of 4.3% per year). Breaking down these numbers shows that over the same period of time the municipal tax portion increased 65% from $181 million to $299 million (an average of 4.3% per year) while the school tax portion also jumped 65% from $208 million to $343 million (an average of 4.3% per year). As a proportion of total property taxes in the province, urban municipal taxes represented 65.5% of the total municipal tax bill in 1985, but had increased to 67.4% by Over the same period, school taxes in urban areas represented 63.7% of all school taxes but had dropped to 56.9% by b. Rural In rural areas the increased in property taxes were more dramatic. Total municipal and school property tax revenues in rural areas climbed 87% from $210 million in 1985 to $392 million in 2000 (an average of 5.8% per year). Breaking down those total revenue numbers reveals that the municipal tax portion increased 50% from $93 million to $140 million over the same period of time (an average of 3.3% per year) while the school tax portion jumped a whopping 116% from $117 million to $253 million (an average of 7.8% per year). As a proportion of total property taxes in the province, rural municipal taxes represented 33.8% of the total municipal tax bill in 1985, but had decreased slightly to 31.5% by Over the same period, however, school taxes in rural areas moved 35.7% of all school taxes but had increased to 41.9% by

7 c. The North For northern municipalities the property tax revenue numbers are relatively small, but the percentage increase over the 15-year period has been the most dramatic. Total municipal and school property tax revenues in northern municipalities climbed 216% from $3.6 million in 1985 to $11.3 million in 2000 (an average of 14.4% per year). Broken down, the municipal tax portion over the same period of time increased 148% from $1.9 million to $4.7 million (an average of 9.9% per year) while the school tax portion increased an incredible 294% from $1.7 million to $6.6 million (an average of 19.6% per year). As a proportion of total property taxes in the province, municipal taxes in northern areas represented just 0.7% of the total municipal tax bill in 1985, but had increased to almost 1.1% by In terms of total school taxes, the north represented 0.5% of all school taxes in 1985 but by 2000 the percentage had also increased to almost 1.1%. -7-

8 3. Property and School, vs Since 1992 was the first full year for the present NDP government in power after defeating the Progressive Conservatives in the election of 1992, it is worth examining the increase of property taxes both before and after that particular year. For the seven-year period from 1985 to 1992, total property tax revenues for all of Saskatchewan increased by 36% from $602 million to $821 million (or 5.2% per year). For the eight-year period from 1992 to 2000, total property tax revenues rose by 27% from $821 million to $1,045 million (or 3.4% per year). From 1985 to 1992, total municipal taxes across the province increased 30% from $276 million to $360 million (an average of 4.4% per year). And from 1992 to 2000 total municipal taxes rose 23% from $360 million to $443 million (an average of 2.9% per year) Also, from 1985 to 1992 total school taxes increased by 41% from $327 million to $461 million (an average of 5.9% per year). And from 1992 to 2000 total school taxes went up 31% from $461 million to $602 million (an average of 3.8% per year) a. Urban From 1985 to 1992, total municipal and school tax revenues in urban areas climbed 41% from $389 million to $547 million (an average of 5.8%). From 1992 to 2000, total municipal and school taxes increased just 17% from $547 million to $642 million (an average of 2.2% per year). In terms of the municipal tax portion, from 1985 to 1992 it increased 39% from $181 million to $251 million (an average of 5.5% per year). From 1992 to 2000, the municipal tax portion went up 19% from $251 million to $298 million (an average of 2.4% per year) Meanwhile, from 1985 to 1992 the school tax portion also increased 42% from $208 million to $295 million (an average of 6.0% per year). From 1992 to 2000, the school tax portion went up 16% from $295 million to $343 million (an average of 2.0% per year). b. Rural From 1985 to 1992, total municipal and school tax revenues in rural areas climbed 27% from $210 million to $267 million (an average of 3.9%). From 1992 to 2000, total municipal and school taxes increased 47% from $267 million to $392 million (an average of 5.9% per year). In terms of the municipal tax portion, from 1985 to 1992 it increased just 13% from $93 million to $105 million (an average of 1.8% per year). From 1992 to 2000, however, the municipal tax portion went up 32% from $105 million to $139 million (an average of 4.1% per year). -8-

9 Meanwhile, from 1985 to 1992 the school tax portion in rural areas increased 38% from $117 million to $162 million (an average of 5.5% per year). From 1992 to 2000, however, the school tax portion went up a whopping 56% from $161 million to $252 million (an average of 7.0% per year). c. The North From 1985 to 1992, total municipal and school tax revenues in the north climbed 105% from $3.6 million to $7.3 million (an average of 14.9%). Then from 1992 to 2000, total municipal and school taxes increased 54% from $7.3 million to $11.3 million (an average of 6.8% per year). In terms of the municipal tax portion, from 1985 to 1992 it increased 89% from $1.9 million to $3.6 million (an average of 11.1% per year). From 1992 to 2000, the municipal tax portion went up 31% from $3.6 million to $4.7 million (an average of 3.9% per year). The school tax portion from 1985 to 1992 in northern municipalities increased an incredible 123% from $1.7 million to $3.7 million (an average of 17.6% per year). From 1992 to 2000, the school tax portion went up another 77% from $3.7 million to $6.6 million (an average of 9.6% per year). -9-

10 4. Saskatchewan s Dependence on School Saskatchewan has the highest property taxes in Canada. The main reason is that the school tax burden is more than twice as heavy as it is in the rest of the country. Property taxes fund 59% of education costs in Saskatchewan, compared to the national average of 26% for the other provinces. The next heaviest school tax burden is in Manitoba, where 51% of the education is paid for by property taxes. In New Brunswick, PEI, and Newfoundland education is funded entirely by the provincial government with other tax revenues. Table #6: Percentage of Education Funding Derived from Property, 2000 Saskatchewan 59.0% Manitoba 51.0% Ontario (1999) 43.5% Alberta 37.5% British Columbia 30.1% Quebec 21.3% Nova Scotia 16.7% New Brunswick 0% Newfoundland 0% PEI 0% Canadian average 25.9% Source: Saskatchewan Department of Education -10-

11 5. The Cause and Impact of High Property Property and school taxes have increased so remarkably over the past 15 years because of off-loading by the provincial government onto local governments. Many municipalities and school boards have raised taxes to make up for provincial cuts to local government, and to meet provincially-mandated cost increases, such as higher salaries for teachers. Schools depend far more heavily on property taxes in Saskatchewan than in other provinces, where more school funding comes out of general provincial revenues. Municipal governments and school boards need to work harder to achieve efficiencies and keep taxes down, but we recognize the provincial government as the real source of the problem and the key to the solution. Saskatchewan has the highest school and property taxes of any province and the burden is growing. The rise in school taxes has been particularly hard on people living in rural areas who are experiencing one of the most serious farm income drops in the history of the province. It must be noted that property and school taxes have been rising at a much faster rate in rural and northern areas than in urban areas since 1992, when the NDP took office. Because of the farm income crisis, many people in rural areas are finding it difficult, if not impossible, to pay these rising local taxes. Most tellingly, a tax revolt spread across rural municipalities last year. But the rate of tax increases is not the only problem with property taxes. Property taxes in general are easily the most destructive, regressive and complicated forms of taxation:! They are charged to property owners regardless of income or ability to pay. Therefore they can be an unreasonable burden on struggling farmers and homeowning seniors on fixed-incomes (to cite two examples).! They bear little relationship to the services actually received by taxpayers.! They punish people for improving their property by raising their taxes.! And the process by which property and school taxes are calculated is very expensive to administer, and very confusing for most taxpayers. Heavy reliance on such a flawed system of taxation to fund schools and vital local services is bad for Saskatchewan in general, and taxpayers in particular. -11-

12 6. Conclusion Property and school taxes are a big part of our tax burden, and perhaps the most inequitable part as well. If we want to keep farmers on the land, if we want to cut the fixed costs for struggling entrepreneurs and encourage wealth creation and job growth, if we want to put more dollars back in the pockets of working families, then we need to lower property and school taxes. Unfortunately, the upward pressure on school taxes in our province doesn t appear to be letting up. The two-year property tax rebate program for farmers, announced in the 2000 budget, is not a solution. It seems very inadequate in light of the growing property tax burden in rural Saskatchewan. What we need is meaningful action to (a) reduce education and property taxes and (b) reform the tax system to reduce and eliminate the problems inherent in the property tax system. Other provinces have found more equitable ways to pay for schools and Saskatchewan should do the same. -12-

13 APPENDIX #1: Saskatchewan Municipal and School Property Year RURAL URBAN NORTHERN Municipal School Municipal School Municipal School Total Municipal Total School Total ,531, ,531, ,574, ,063,842 4,737,887 6,610, ,843, ,205,606 1,045,049, ,192, ,503, ,493, ,946,154 4,385,270 6,225, ,071, ,674,828 1,021,745, ,156, ,210, ,286, ,641,151 4,467,919 6,257, ,911, ,109, ,020, ,298, ,961, ,317, ,313,372 4,278,261 5,415, ,894, ,690, ,584, ,081, ,748, ,374, ,984,267 4,112,400 4,799, ,567, ,532, ,099, ,112, ,549, ,430, ,116,441 4,149,210 4,164, ,691, ,830, ,522, ,827, ,214, ,811, ,288,967 3,818,247 4,129, ,457, ,632, ,090, ,915, ,253, ,673, ,773,658 3,832,848 3,973, ,422, ,000, ,422, ,338, ,620, ,097, ,828,389 3,606,736 3,740, ,043, ,189, ,232, ,543, ,895, ,713, ,907,928 3,040,184 3,660, ,296, ,463, ,760, ,808, ,849, ,040, ,969,508 2,789,367 3,270, ,638, ,090, ,728, ,562, ,819, ,924, ,537,275 2,629,406 3,076, ,116, ,433, ,550, ,354, ,691, ,800, ,634,924 2,393,693 2,894, ,548, ,221, ,769, ,084, ,175, ,694, ,689,960 2,251,349 2,420, ,030, ,285, ,315, ,747, ,826, ,517, ,156,737 1,994,576 2,282, ,259, ,265, ,525, ,287, ,704, ,768, ,399,516 1,912,393 1,676, ,968, ,780, ,749,207 Source: Obtained by the Canadian Taxpayers Federation from the Department of Municipal Affairs through Freedom of Information

2001 COOPERATIVE CREDIT ASSOCIATIONS - (in thousands of dollars) TABLE 1 - ASSETS

2001 COOPERATIVE CREDIT ASSOCIATIONS - (in thousands of dollars) TABLE 1 - ASSETS TABLE 1 - ASSETS British Columbia Ontario Ltd. Nova Scotia Alberta Canada Cash resources 0 28,905 5 19,473 2,622 Deposits with regulated financial institutions.. 532,821 32,743 160,372 8,802 0 Securities