Lower business tax debate returns to city hall
Posted on March 4, 2017 in In the Media
One of the key issues from the 2016 municipal election returns to Saskatoon city hall Monday.
Representatives of the Greater Saskatoon Chamber of Commerce and the North Saskatoon Business Association plan to appear in front of city council’s finance committee to argue for a further reduction in property taxes for businesses.
Mayor Charlie Clark successfully used a proposal to alter the property tax ratio as a wedge issue during the fall election campaign.
Clark argued the proposed shift would mean higher property taxes for residents when business property taxes in the city are already the lowest on the Prairies. His opponents, former mayor Don Atchison and challenger Kelley Moore, said lowering the amount businesses pay would attract investment, increase the tax base and result in lower taxes for all.
“It’s crucial we maintain that advantage,” Keith Moen, executive director of the North Saskatoon Business Association, said Friday in an interview.
Moen made an unusual foray into the election campaign when he criticized Clark’s stance on the issue. Only two of the councillors elected in October, Troy Davies and Randy Donauer, offered unconditional support for lowering the ratio of taxes paid by businesses.
In 2001, Saskatoon city council decided to lower the amount paid by businesses; the overall business tax ratio dropped from 2.41 to 1.75 over the next nine years. The shift took into account that businesses can deduct their property tax payments from their income taxes.
Clark argued during the election that this resulted in an increase in property taxes for homeowners. Proponents of the move argued it would encourage increases in investment and the overall tax base.
In 2013, council voted to defer a decision on whether to back a proposal by the chamber to further lower the ratio to 1.43 until after revaluation, which happened earlier this year. Revaluation updates property values so they are more current.
The revaluation found that between 2011 and 2015, the assessed value of businesses and other non-residential properties increased by more than twice that of residential properties — 36 per cent, compared to 14 per cent.
Unlike in 2013, when city hall administration backed the tax shift, the report to be considered by the finance committee only lays out various options.
“I’m just hopeful that council will keep an open mind on this,” chamber executive director Kent Smith-Windsor said on Friday. “We’ve got a good policy; 1.43 (tax ratio) would be great.”
Smith-Windsor credited the shift that started in 2001 with increasing the non-residential assessment from $7,500 per capita to $35,000 per capita.
The finance committee report, however, says economic literature is “inconclusive” on the degree to which tax ratio policy affects business decisions. Saskatoon boasts the second lowest property taxes for both businesses and homes in Western Canada, the report says.
Smith-Windsor said small businesses need an advantage to compete against new challenges like online retail. A lower tax ratio will also help encourage a long-standing City of Saskatoon goal of greater investment in the downtown, he said.
Although Saskatoon may have the most attractive property tax for businesses, other communities are making efforts to increase their competitiveness, Smith-Windsor said. For example, Winnipeg has introduced property tax exemptions for businesses, he said.
Moen said Saskatoon does not only have to worry about competing for investment with larger centres, but also smaller ones.
“There are lots of other options,” he said. “Capital is mobile. It will go to where it most makes sense.”
The finance committee report says a final decision on the tax ratio must be made at the March 27 city council meeting.