A report released last week shows where the city of Estevan and the rural municipality of Estevan compare with other municipalities in terms of residential and commercial property taxes.
The Saskatchewan branch of the Canadian Federation of Independent Business (CFIB) released its annual property tax gap report on Dec. 6. The document measures the amount of commercial property taxes paid for every $200,000 in assessment, and compares it with residential taxes for every $200,000 in assessment.
The document released is for 2016 property values.
The city of Estevan’s standing improved slightly in the CFIB report. Estevan ranked 13th out of the 15 Saskatchewan cities with a municipal property tax gap of 3.09, which means the municipal portion of commercial property taxes were a little more than triple their residential counterparts. The Energy City was 14th in 2015 with a gap of 3.26.
The 5.21 per cent improvement from 2015 to 2016 was the second-best among Saskatchewan cities.
In Estevan’s case, the average commercial property paid $3,918 in municipal property taxes for every $200,000 in assessment, which placed Estevan 10th among the cities. The provincial average for commercial municipal property taxes was $3,536.
Residential property owners in Estevan paid $1,267 in municipal property taxes for every $200,000 in assessed value, which left Estevan fourth.
The provincial average for residential property taxes was $1,476.
The report also looks at total property taxes, including those paid to school divisions. Estevan remained in 13th for the property tax gap at 2.83. Commercial property owners paid $5,574 in taxes for every $200,000 in assessment, while residential property owners paid $1,971.
Jennifer Henshaw, the senior policy analyst for CFIB Saskatchewan, said some municipalities are doing a better job than others at creating what CFIB views as fair property taxes for small businesses.
In Estevan’s case, she is pleased the city has taken strides to reduce the property tax gap, but it’s still towards the bottom of the pack.
“There’s still a lot of work to do in the city of Estevan,” said Henshaw.
Henshaw said the CFIB receives concerns from tis members about the property tax gap. But they’re also concerned about annual increases in property taxes.
“When we asked our small business owners across the province whether municipal property tax increases have negatively impact their business, 74 per cent agreed that they had, while only 16 per cent disagreed,” said Henshaw.
CFIB also asked the specific impact of municipal tax increases, and 87 per cent of business owners said they had to delay investment in their business due to tax increases. Forty-four per cent froze hiring and 28 per cent reduced staff hours.
Many of them are aware of the property tax gap between commercial and residential properties, she said.
Henshaw said that while the CFIB’s top priority is to see the property tax gap reduced, the agency also wants to see municipalities limit year-over-year spending growth to a maximum of inflation and population growth; reform municipal banked sick day policies; review current programs and services to identify areas that can be streamlined or eliminated; and devise a plan to reduce the size of municipal civil service through attrition.
City manager Jeff Ward said council looks at what it needs for tax revenue each year, and how the tax burden should be applied. Council has decided to reduce that burden for commercial properties and help the city be more attractive for businesses.
“I think you’ll see that (property tax gap) number come down, and our ranking will move more to the middle of the pack,” said Ward.
He noted that internal reports among the cities show that Estevan’s ratio has gone down this year, and he believes Estevan’s standing will improve for CFIB’s next report.
Council wants to make Estevan an attractive place for new business ventures to thrive, he said, but council is also cognisant of how a shift to residential property taxes will affect homeowners.
“They look at fixed income individuals when they’re doing tax increases, so they can only push the residential tax revenues so high, knowing that they still need a base tax revenue to complete all the capital and operational works that are required,” said Ward.
As for the rural municipality of Estevan, it ranked 12th among the 31 RMs with a population above 1,000 people with a gap of 1.79 for the municipal share of property taxes. Commercial property owners paid $1,800 for every $200,000 in assessed property value, and residential owners paid $1,008.
The RM also ranked 12th in total property taxes with a gap of 2.02. Commercial property owners paid $3,456 for every $200,000, while residential property owners paid $1,712.
Grace Potter, the administrator for the RM of Estevan, noted the RM is fairly close to Lumsden, which had the lowest property tax gap in Saskatchewan at 1.68.
The RM pays close attention to the property tax gap report when it comes out each year, she said, and the RM doesn’t want to be at the bottom of the list.
“We are trying to be as fair as we can,” said Potter.
While the RM’s property tax gap isn’t as low as Lumsden, Potter said a commercial property in Lumsden pays $4,280 for every $200,000 in assessed value.
Potter said she does take issue with CFIB’s recommendation that the provincial government should reject proposals to provide increased taxation powers to municipalities.
“I wonder why they would say that when it’s the provincial government that sets the percentages of value and the mill rates for the school divisions,” said Potter.
Jackie Wall, the executive director of the Estevan Chamber of Commerce, said chambers continue to advocate for changes in business assessment and taxation.
Local chamber members have been more concerned with property taxes than a gap that exists with residential taxes. Some have had a 200 to 400 per cent increase in their property taxes, thanks to the Saskatchewan reassessment this year.
“We need some reform across the board when it comes to property taxation,” said Wall.
