Municipal Tax System Review

Res #: 8-05M
Number: 8
Year: 2005
Midterm: Yes
Expired: Yes
Responses Received: No
Departments: Saskatchewan Government Relations

Resolution 8-05M

WHEREAS, the hog industry in particular is consolidated into a few large companies, and they are currently not paying taxes in the municipalities where they are located; and

WHEREAS, rural municipalities are increasingly reluctant to approve new ILO development when the tax benefit and 80% of the economic benefit accrue to the province and large urban municipalities that house the processing facilities; and

WHEREAS, if we are to see progress in the “new rural economy”, it is necessary to overhaul the antiquated municipal tax system that does not respond to the current realities; and

WHEREAS, the provincial government seems confused by SARM resolutions as to the desire by the SARM membership to overhaul the tax system; and

WHEREAS, the increasing downloading of responsibility from the Province to the municipal level requires a broader tax base than simply the land base to address capital needs such as health and education requirements;

THEREFORE BE IT RESOLVED, that the Province, led by the Department of Government Relations, in concert and co-operation with SARM and SUMA, move immediately to establish a process to address the need for change in the municipal tax regime.

Response from the Honourable Len Taylor, Minister of Government Relations:

Government Relations has prepared a paper that reviews rural property tax exemptions and their consistency in the legislation for the various types of municipalities. Legislative amendments may be considered following consultation with the municipal and education sectors, and other interested parties. Under present legislation, intensive livestock operations (ILOs) and large buildings such as those used for vegetable storage are exempt from property tax.

In the summer of 1998, the then Municipal Affairs, Culture and Housing department established two committees to review property tax policies and to develop recommendations in separate reports to government. Both committees had representation from the local government associations representing the municipal and school sectors, as well some government departments. The tax exemption committee acknowledged that there is a provincial interest in the statutory property tax exemptions for unoccupied farm dwellings, greenhouses and agricultural improvements (including ILOs), based on the rationale that these exemptions support the agricultural sector in general. No recommendation for change was put forward by the committee. There is presently a discrepancy between the rural and urban Acts in respect of agricultural improvements.

During committee deliberations, SUMA stated it was not in favour of expanding exemptions for agricultural improvements in the urban Act and found it hard to rationalize it in the rural Act. SARM did not believe at the time that there were any problems with the current exemption regime in this regard. The new Municipalities Act, which comes into force on January 1, 2006, carries forward the existing rural and urban provisions without any changes. There is no plan to changes these provisions within The Municipalities Act in the immediate future.