Dear Mayor Clark and Councillors,
We thank our municipal leaders for continuing to undertake the important work of reviewing Saskatchewan’s property tax model and finding opportunities to modernize and simplify this complicated system. The release of the International Property Tax Institute’s (IPTI) report conducted on behalf of SUMA in 2021, was a welcome deep dive into a system that needs to be more transparent, predictable, fair and competitive.
As you know, competition between provinces and cities for new and expanding businesses is fierce. Provinces with modern taxation regimes, and pro-growth regulatory environments, will ultimately win. Those continuing to employ antiquated taxation models risk being left behind.
As a Chamber, we aim to promote economic growth and prosperity by ensuring that Saskatchewan and ultimately Saskatoon are attractive and affordable places to do business.
The Chamber mobilized a group of industry experts and members to lead our efforts to propose changes to the property tax model in Saskatchewan and respond to the options presented in the IPTI report. We wanted to take this opportunity to reiterate the Chamber’s longstanding recommendations for property tax reform and introduce further recommendations aimed at making sure that Saskatoon has the best business climate in Canada.
What follows are our top recommendations for implementation:
1. True Market Values
The current mass appraisal approach pools a huge diversity of properties into one valuation model. As the IPTI report suggests, because single property appraisal techniques are prohibited throughout the province, neither the assessor nor the ratepayer can achieve a true market value.
We believe that moving to an assessment approach that utilizes true market value is the cornerstone option to modernization of Saskatchewan’s property tax model. This change would be the most impactful and most straightforward to implement.
To address the concern that there is insufficient data and transactions, we believe that there may be an important role for commercial realtors, property managers and landlords to play in supplying information on rents, real estate improvements and sale transactions directly to the city’s assessors.
2. Remove horizontal inequity
To enhance parity and incentivize business growth and expansion in the province, property classes should be treated more equally. All property types are currently assessed based on differing percentages of value (POV) thereby creating horizontal inequity. These inconsistencies weaken the connection between the assessed value of properties and the actual taxes owing.
Due to the nature of this qualifying tool, the percentage does not directly affect the taxes that are collected from a property since the tax rate is set by the municipality who may, at their discretion, remove the benefit of a lower POV. Removing the POV from the assessment calculation will help simplify the property tax system.
3. Shorten the Cycle
For years, the Chamber has held the belief that more frequent assessments, with shorter base dates, will increase the predictability and stability of property tax payments and reduce what sometimes appear to be arbitrary increases. Creating more certainty and stability would not only benefit current businesses and residents, but it would also showcase Saskatchewan as being more competitive with a friendly tax environment on par with neighbouring jurisdictions.
4. No taxation without representation
Libraries are important to the quality of life in thriving communities. They support literacy and lifelong learning and play an important role in the educational, recreational and cultural life of a city.
Under the Public Libraries Act, 1996, municipal library boards are responsible for the “management, regulation and control” of the library, consisting of the mayor and six to eight members appointed by City Council. Under the same Act, taxes for libraries are “to be levied and collected on the same basis as taxes for municipal purposes are levied and collected.”
Since the decisions of this body can significantly impact the property tax levied on residential and commercial property owners, we believe the legislation should be amended such that the library board is elected by ratepayers in the same way that elections are held for school boards. This change in governance would ensure the board is directly accountable to ratepayers and the community it serves.
5. Introduction of a Small Business Subclass
Small businesses comprise a strong majority of Saskatoon’s commercial sector, some of which own the buildings in which they operate. With margins shrinking and pressures mounting on small businesses, any opportunity to provide relief should be perused. The Chamber is recommending the introduction of a new subclass that would allow the City to effectively provide tax relief to small enterprises in Saskatoon.
The creation of a subclass could be modelled after the Ontario Small Business Subclass. Its purpose is to provide municipalities with the flexibility to target property tax relief to eligible small businesses. In addition to municipal taxation relief the Province matches the municipal property tax reductions with education property tax reductions.
This tax tool recognizes the contribution of small businesses to employment, neighborhood vibrancy, and quality of life. Growing SME businesses and thriving commercial districts are essential to a healthy, high performing economy.
Our business community is eager to advance reforms that modernize our property tax model and make it equitable, transparent and simple for the taxpayer. Know that we stand ready to work with you to address today’s challenges and ignite a new era of economic renewal and prosperity for our city and province. We look forward to continued collaboration and consultation on this important file.