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Effective Tax Rate (ETR)

Res #: 7-24M
Number: 7
Year: 2024
Midterm: Yes
Expired: No
Responses Received: Yes
Departments: Saskatchewan Ministry of Government Relations

WHEREAS the local tax tools limit, in effect for the 2023 property taxation year, sets the ratio between the highest ETR and the lowest ETR of any property class to be no more than 7:1.

WHEREAS each municipality is required to provide quality levels of services to our ratepayers, and some property classes (Commercial: Industrial/Resource) receive higher levels of services to promote industry competitiveness and growth.

WHEREAS the implementation of a 7:1 ratio impacts individual property classes significantly, resulting in an evaluation of service provision to maintain taxation fairness in the interest of protecting Saskatchewan’s plan for growth.

BE IT RESOLVED that SARM lobby the provincial government to remove the effective tax ratio and support each municipality to administer their tax tools that best fit each unique community and the diversity within.

BE IT FURTHER RESOLVED that if the 7:1 effective tax ratio continues, that all rural municipalities are given the same extension time frame for compliance.

Responses From: Saskatchewan Ministry of Government Relations

December 17, 2024

  • Government has committed in the Saskatchewan Plan for Growth to maintaining a competitive tax environment. This includes municipal property taxes and the use of local tax tools. The effective tax rate (ETR) limit is part of this plan to support municipal competitiveness and help ensure fair tax distribution across the property tax classes.
  • Prior to the introduction of this limit for the 2023 property tax year, some rural municipalities had ETR ratios as high as 18:1 by using base taxes and mill rate factors to exceed the previous mill rate factor limit.
  • As a partner in the economic growth of the province, government expects municipal councils and administrations to comply with the 7:1 limit. Other provinces, such as Alberta, have more restrictive limits and industry groups have recommended tighter restrictions, so Saskatchewan needs to remain competitive in this regard.
  • It is important to note also that agricultural and residential ratepayers benefit from being taxed on a lower percentage of their property’s value than commercial and industrial property owners. Percentages of value are set by the province and government has decided these will remain unchanged for the 2025 revaluation as follows: 45 per cent for non-arable/pasture land, 55 per cent for cultivated and other agricultural property, 80 per cent for all types of residential property and 85 per cent for commercial/industrial and resource property.
  • Government has allowed municipalities to request an extension if they develop a plan and timeline for how the municipality will adjust its tax policy, its spending, and/or undertake other measures to become compliant. Government approved several of these requests in 2023 and encouraged those municipalities to revisit their plans using updated assessment data as a result of the 2025 revaluation. A municipality’s assessment base is likely to change because of updated assessment values in 2025, and extensions may no longer be needed.
  • Municipalities are also encouraged to consider measures such as reserves, agreements, unconditional revenue sharing, special taxes, local improvements and service areas to address infrastructure and servicing needs.

Hon. Eric Schmalz – Minister of Government Relations, Government of Saskatchewan