The Canadian Federation of Independent Business (CFIB) has released its annual report on commercial property taxes in Saskatchewan, and once again, their findings were not kind to the City of Estevan.
According to the report, released on Nov. 15, Estevan ranked 14th out of 15 cities in the province in terms of the “property tax gap” that CFIB calculates. Estevan’s gap was at 3.26, leaving it ahead of only Prince Albert, whose gap was 3.92.
The figures are based on the 2015 property taxes.
Estevan’s number was a slight improvement from 2014, when it also ranked 14th with a figure of 3.29.
CFIB compares commercial property taxes with their residential counterparts to determine the property tax gap. Commercial and residential property taxes are tracked for every $200,000 in assessed value.
CFIB`s report includes both the municipal share of property taxes, and overall property taxes with the school boards’ share.
In the City of Estevan’s case, the amount of municipal commercial property taxes paid per $200,000 of assessment in 2015 was $3,937, while the residential taxes were $1,208, which resulted in the 3.26 municipal property tax gap.
The overall commercial property tax amount was $5,593, compared to $1,912 for a residential property, for a gap of 2.93, which was also 14th in the province.
As far as overall property tax values, Estevan rated 11th among the cities in commercial property taxes paid per $200,000 in assessment, and fourth in residential property taxes per $200,000.
Jennifer Henshaw, a policy analyst for CFIB, said the organization didn’t take any consolation in Estevan’s slight improvement in the property tax gap.
“It’s clear that many business owners continue to pay more than their fair share in property taxes,” said Henshaw.
She lauded the City of Saskatoon’s plan to reduce their property tax gap to 1.43, and believes that figure is an ideal one for the tax gap.
“Ideally we’d like to see parity in terms of what commercial property owners and residential property owners did pay, but we’d (at least) like to see it come down to 1.43,” said Henshaw.
There’s a perception that small business owners have a greater capacity to pay property taxes, but Henshaw described that as inaccurate. She noted that many small businesses have razor-thin profit margins, and high property taxes leave them with fewer resources to put back into their businesses or the community.
Henshaw hopes the three new members of Estevan city council who were voted in during the Oct. 26 civic election will support CFIB’s goal to see a lower property tax gap.
City manager Jeff Ward said council will review the findings from the CFIB. Council had placed a greater tax burden on commercial properties for a few years, which has dropped Estevan’s ranking from earlier in the decade, when the city had one of the best scores in the province.
“It’s good to have that comparison,” said Ward.
He will be interested to see how Estevan fares in next year’s report, since that’s when the 2016 figures will be taken into account. Council placed a slightly larger burden on residences for the 2016 property tax increase, which should reduce the gap in Estevan.
At the same time, Ward said the CFIB numbers don’t always represent the full picture, because of how commercial businesses are assessed in each city.
“There are a lot of market conditions, and I know Estevan is different than some of the other cities in there as well,” said Ward. “And I noticed that report never indicates that commercial property taxes can be deducted for tax purposes as well, whereas a residential home generally can’t, unless there’s a home business being operated, and even then, only a portion of it (can be written off).”
Ward’s not sure whether council will want to further reduce the property tax gap when they begin deliberations on the 2017 budget.
Jackie Wall, the executive director at the Estevan Chamber of Commerce, said chambers across the province have been asking for change in the assessment process for some time, and the CFIB report is an example of why change is needed.
They pointed to the four-year assessment cycle as an issue that needs to be addressed.
“Take Estevan for an example,” said Wall. “It was assessed four years ago. What have our property values, overall, done in the last two years? They’ve gone down. It’s a very complex system. It’s a system that taxes on the value of an asset, rather than on the value of what that asset is producing.”
During her 16 months on the job, Wall said she hasn’t had a lot of businesses complain about the ratio between commercial and residential property taxes. But there are a lot who are worried about the amount they pay in taxes, especially after the new assessments came out earlier this year.
“They feel like this is it. Don’t raise our taxes anymore,” said Wall. “We’re paying … more than our fair share.”
A large percentage of the responses they received for the 2016 budget were related to taxes.
Wall promised the chamber will be paying close attention to the contents of the city’s 2017 budget, and they will also provide the city with feedback from the chamber members.
CFIB also evaluated rural municipalities with a population of at least 1,000 people. The RM of Estevan did well in the report, as they had a property tax gap of 1.79, which left them in a tie for 11th with the Rural Municipality of Weyburn.
Thirty-one rural municipalities were evaluated.
The average municipal commercial property tax bill for a property worth $200,000 in the RM was $1,800, compared to a residential property’s tab of $1,008. Total commercial property taxes per $200,000 in assessment was $3,456, versus residential taxes of $1,712, for a gap of 2.02, which also left the RM tied with Weyburn for 11th spot.
Last year the RM was 12th with a property tax gap of 1.79.
