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Property Tax Ratio Debate

Some thoughts from Charlie Clark on Saskatoon’s property tax ratio and why he is against changing it.

While the ink is barely dry on the Flat Tax debate – we are back into a discussion on taxation with the Administration’s proposal to further reduce the amount that businesses pay in tax in comparison to homeowners by shifting the tax burden from one to another. The proposal is to move our ‘tax ratio’ (the amount of tax a commercial entity pays compared to a residential property) from 1.75 to 1.43.

In real terms – moving from a 1.75 to a 1.43 tax ratio would means reducing business taxes by $6.9 million/year and adding them on to homeowner’s taxes. I have certainly not been getting the message lately that homeowners are enthusiastic about tax increases – especially if there is nothing tangible to show for the increase. $6.9million is about 2/3 of our road maintenance budget, 3x our street sweeping budget, or 3/4 of our snow clearing budget.

I frankly remain a bit dumbfounded as to how this debate has gotten this far at this time in Saskatoon. A quick survey of other provinces and municipalities shows that we are already way on the low end of the spectrum with this 1.75 ratio. Calgary’s ratio is 4.09, Edmonton’s ratio is 3.01, Vancouver’s ratio is 4.84, Victoria’s ratio is 3.66 and Banff’s ratio is 6.0! On top of this as I have pointed out before, Saskatoon has been rated the most tax-competitive Municipality in the country to do business, most recently by a 2012 KPMG report.

It is very important that we do what we can to build a strong City that has the conditions for businesses to succeed. As I travel the City the main concerns I am hearing from people in the business community have to do with the condition of our roads, growing traffic congestion, and other infrastructure challenges.

City Council has been struggling to find the means to pay for the costs of getting our roads back into shape – and providing better basic services such as street sweeping, lane maintenance, water main repair, snow clearing – all services that reflect on the City and affect businesses ability to operate. At this point we are doing well on the tax-competitiveness front – we need to ensure that we build a City that has a good quality of life and good services that attract talent and companies to set up and expand here. Raising taxes on home-owners without adding more services only eats into our ability to raise revenues that we need to deal with the challenges of a growing City. The cost/benefit analysis on this one is completely unpersuasive and I will be voting against.

Its weird.  You listen to Calgary and Edmonton’s business community and while taxes are a factor, they are well down on their list of priorities of things they want the city to do.  Even Regina has looked at our (lower) tax rate and yawned.  It’s not what attracts businesses to cities and almost every urbanist, economist, and politician outside of the City of Saskatoon agrees with that.  Glad to see Coun. Clark take a stand on this issue.

One Comment

  1. Jolo says:

    Shouldn’t the debate be about whether our ratio stays where it is or moves to 2.0?

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