Much ado about whose property taxes are lowest

Calgary Mayor Naheed Nenshi won a divisive election campaign last week in which, new arena aside, property taxes featured as the major issue. That’s interesting because Calgary’s residential property taxes are generally considered among the lowest in Canada.

A chart on Nenshi’s campaign website showed Calgary with the lowest property taxes among 10 Canadian cities, including the five largest Prairie cities. Saskatoon ranks fourth highest among the five.

Saskatoon’s ranking will come as a surprise to those who paid close attention when the city’s preliminary 2018 budget was released last week. Information released by the city showed Saskatoon with the second lowest residential property taxes, behind only Calgary.

The discrepancy comes in how the two calculations were done. Calgary’s seems pretty nebulous with the municipal property tax calculated on a “representative two-storey house” in 2015. Calgary rings in at $1,503, followed by Regina ($1,642), Winnipeg ($1,618), Saskatoon ($2,048) and Edmonton ($2,306).

The City of Bridges comes up more favourably in a chart released by the City of Saskatoon, which tracked municipal property taxes on a home with an assessed value of $400,000. Measured that way, Calgary’s still ranked the lowest at $1,585.32, followed by Saskatoon ($1,877.38), Regina ($2,172.58), Winnipeg ($2,351.34) and Edmonton ($2,402.64).

So which one should Prairie taxpayers believe? Municipal governments tend to like whichever comparison makes them look better.

Three years ago, city council attacked the Huffington Post for claiming Saskatoon levied the nation’s highest property taxes, based on a Real Property Association of Canada (REALpac) report. That report calculated the property tax based on $1,000 of assessed value.

Councillors rightly blasted the calculation that failed to take into account that only 70 per cent of a property’s assessed value is taxable. That yielded a total tax bill for an average Saskatoon home, including municipal, library and education taxes, at $4,440 instead of $3,108.

The city’s assessor at the time said property taxes per capita was a better way to measure. Is it, though? The city has produced lots of information on property tax using per capita calculations. That seems strange because taxes are calculated based on properties, not people.

The value of a property occupied by a twoincome couple with three young children is assessed the same as the house next door occupied by a two-income couple with no kids. Those kids play little to no role in the economy or in paying the taxes.

Similarly, a house with six adults is taxed the same as a house with one occupant.

City hall likely embraced the per capita approach because it tends to be favourable toward a young city like Saskatoon. According to the 2016 census, 18 per cent of the city’s population was younger than 15. Perhaps those children should be excluded from per capita calculations to better reflect who pays taxes. Saskatoon’s percentage of children younger than 15 and its occupancy per residence is pretty similar to the other four largest Prairie cities.

Todd MacKay, Prairie director of the Canadian Taxpayers Federation, admitted last week his organization has struggled with the best way to calculate property tax for comparisons. MacKay said using spending per capita might serve as a better measure. Maybe average taxes by property would more accurately reflect how much people are paying, but that does not reflect as favourably on Saskatoon.

In 2017, the average municipal property tax for residential properties, based on $150.9 million collected and about 88,000 residential properties, was roughly $1,714.77. Another $66.9 million was collected from about 7,000 commercial and industrial properties for an average of about $9,957.14.

Perhaps it’s also time to start including water and power rates in the overall homeowner revenue burden calculation, especially since the City of Saskatoon has started using this money to help cover its operating budget.

The city is midway through a four-year cycle of increasing water rates by more than nine per cent a year, purportedly to replace lead pipes, but money is also being funnelled to cover operating expenses. The city calls this a return on investment. The Canadian Taxpayers Federation calls it a “backdoor tax.”