Tax shift expected to help businesses

Companies will pay $1.59 for every dollar residential taxpayers pay

Saskatoon Mayor Charlie Clark said he had not abandoned a key election promise on Monday when he voted in favour of a proposal to lower the proportion of property taxes paid by businesses.

City council endorsed the socalled property tax shift to offset a big increase in property taxes for businesses after the value of all property was reassessed this year.

Clark, who used his opposition to the proposed tax shift as a wedge issue in the fall 2016 election, voted with eight other councillors to lower the amount businesses pay to $1.59 from $1.75 for every dollar paid by residential taxpayers.

“It’s really a compromise situation to deal with an unusual spike change in the reassessment and so for that reason I think this was the right (decision) to make given our economic circumstances,” Clark told reporters. “We absolutely, as I have said, we also want to continue to be a tax-competitive jurisdiction to attract businesses here.”

If council had left the ratio at $1.75, businesses would have been hit with an average property tax increase of nearly 17 per cent, while residents would have seen an average decrease of one per cent.

Under the adjusted ratio approved Monday, average business property tax will increase nearly 10 per cent in 2017, while for residential properties it will increase by slightly less than two per cent on average.

That still represents a drop from the 4.2 per cent increase residential property owners were expecting with the combined municipal and library increase for 2017.

Overall, residents now will pay 69.2 per cent of the property tax collected by the city, while businesses will pay 30.8 per cent. Under the old ratio, residents would have paid 67.8 per cent and businesses 32.8 per cent.

“I actually think this is a very generous compromise,” Coun. Ann Iwanchuk said.

Coun. Cynthia Block said she’s concerned the shift will confuse residents.

Between 2001 to 2010, the City of Saskatoon lowered the businesst-o-resident ratio from 2.41 to 1.75. A 2013 city report said this shift resulted in residential taxpayers paying about $4.7 million more a year.

Supporters of the tax shift, including the Greater Saskatoon Chamber of Commerce and the North Saskatoon Business Association, argue that a more competitive tax regime will attract investment and lower taxes for everyone.

Coun. Mairin Loewen, who voted alone Monday against the tax shift, said there is not a lot of evidence to connect business investment to tax policy. Coun. Darren Hill also said he’s “skeptical” that lower property taxes alone attracted businesses during the resource boom of the last decade.

Coun. Randy Donauer did not get support to lower the ratio to 1.43 over 16 years.

Donauer and other speakers said more frequent reassessment is needed. Saskatchewan is the only Prairie province with such a long period between property assessments.

“We’re all on the same page on this,” Coun. Zach Jeffries said. “None of us like a four-year cycle.”