Council to vote on business tax reduction: Would pay $1.43 for each dollar paid by a homeowner

By Charles Hamilton, The Star Phoenix April 6, 2013 - Business owners say a proposed change that would shift some of the municipal tax burden away from their businesses and onto homeowners is a good way to attract more investment to Saskatoon.

But not everyone thinks residents should be the ones bearing the brunt of the tax hike.

City council will decide on Monday whether to change the city's property tax ratio. Civic administrators have recommend narrowing the commercial-to-residential tax ratio so that by 2020 businesses would pay just $1.43 for each dollar paid by a homeowner, compared to the current $1.75.

With this change, the average homeowner would pay an average of $8 more per year, while businesses would pay less.

"If we can provide a signal to the business community that we have a long-term path that will position us as being the most competitive jurisdiction in Western Canada from a tax policy perspective, that's an extraordinary tool to influence investment decisions," said Kent Smith-Windsor, executive director of the Greater Saskatoon Chamber of Commerce.

Smith-Windsor says a lower non-residential tax rate would make Saskatoon more attractive for businesses, and could help the city grow its tax base.

But one city councillor says Saskatoon already has an extremely competitive commercial tax rate and there's no reason to burden homeowners with more tax increases.

"I am in favour of us being competitive, I'm in favour of attracting businesses to the community and I think we need to do all that we can to do that," said Coun. Charlie Clark.

"But in this case, there has not been a clear argument why residents should pay additional taxes to drive down commercial taxes when we are already the lowest-tax area in North America."

Clark said the city should focus on improving civic services like road and snow clearing if council is going to ask homeowners to pay more taxes. Business decisions are based on more than tax calculations, he said.

"If we are going to add more taxes on residents I want to see us provide better services, and I think better services are going to attract more businesses here because that is holding us back here more than anything," Clark said.

Smith-Windsor said Saskatoon is well positioned against cities such as Winnipeg, Edmonton and Calgary. In Regina the commercial-to-to-residential tax ratio is $1.95 to $1. In Vancouver, the ratio is $4 to $1.

Smith-Windsor wants to see the city continue to lower the tax ratio difference between business and residential taxes, especially given the competitive tax rates in places like Warman and Martensville.

"If tax policy doesn't make a difference, why did Saskatoon grow substantially more than anywhere else in Saskatchewan? The distinguishing feature is we had a better tax policy," he said.

Marlys Bilanski, the city's general manager of corporate services, said while the city can't prove confirm that adjusting the tax ratio would indeed lead to more business investment in the city, the adjustment does level the playing field for business owners.

"What we are looking at is maintaining an equitable relationship between your business and residential," Bilanski said.

Without lowering the business side of the tax ratio, Saskatoon can remain competitive, since no other jurisdiction is lowering its ratio below 1.75, Bilanski conceded. However, if council does choose to lower it, the city would be "leading edge," she said.

Council also has the option to set the commercial-to-residential tax ratio at $1.66 to $1, which would compensate for the huge spike in property values caused by this year's provincial reassessment numbers. Council is scheduled to vote on the issue at Monday's city council meeting.

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