Tax Rate Ratio

Res #: 9-23A
Number: 9
Year: 2023
Midterm: No
Expired: No
Responses Received: Yes
Departments: Saskatchewan Ministry of Government Relations

WHEREAS the Government of Saskatchewan has implemented tax tool changes including lowering the effective tax
rate ratio to 7:1 from 9:1 without consulting with the municipalities of Saskatchewan.

WHEREAS these changes detrimentally impact municipalities in which commercial enterprises cause extensive costs
that were previously funded using a 9:1 ratio and tax tools such as base taxes.

WHEREAS these municipalities now need to recover these costs elsewhere.

BE IT RESOLVED that SARM lobby the government to rescind the ratio changes.

BE IT FURTHER RESOLVED that if the ratio changes are “arbitrarily” implemented, SARM lobby the government to
offset the tax losses by 50% for 3 years to give the affected municipalities time to develop initiatives.

Responses From: Saskatchewan Ministry of Government Relations

May 31, 2023

  • Government is committed to positioning the province for economic growth, investment and goals identified in Saskatchewan’s Growth An important part of this plan is a fair and equitable proper ty tax system. The effective tax rate (ETR) limit of 7:1 considers the use of all local tax tools and their effect on a municipality’s property tax distribution, whereas the mill rate factor limit of 9:1 only considers mill rate factors.
  • The ETR limit does not reduce a property’s assessment and is not intended to reduce municipal revenue. It is intended to produce a more equitable distribution of property taxes by ensuring no one class of property is taxed at a rate exceeding seven times that of another property Other jurisdictions have lower tax rate limits, and Saskatchewan needs to be competitive in this aspect.
  • Within the ETR limit of 7:1, council has full ability to develop taxation and other policies to cover municipal This includes shifting or reducing property taxes, using reserves, surpluses, and other funding sources such as road maintenance agreements and unconditional revenue sharing.
  • The Ministry of Government Relations (GR) started its consultations on establishing a new limit on local tax tools in The Saskatchewan Association of Rural Municipalities (SARM) and rural municipalities (RMs) have been consulted on and informed about government’s decision to introduce a new limit to local tax tools throughout 2022 and early 2023 through letters, articles in Municipalities Today, website materials and webinars.
  • The ministry has sent the impacted municipalities an information sheet and other materials, including the available tools that the impacted municipalities could use to comply with the limit.
  • It is estimated that only 7 per cent or about 20 RMs need to adjust their tax policy to meet the limit in Any municipality unable to meet the limit in 2023 may request an extension of time by submitting a proposal to the ministry for the minister’s approval. Several municipalities have contacted the ministry about requesting an extension.
  • An extension of time request should include:
    • A rationale or explanation of why an extension of time is required;
    • A plan showing or demonstrating how the municipality intends to comply with the new limit;
    • A definite timeline of when the municipality will become compliant with the new limit;
    • History of compliance with mill rate factor limits and other legislative requirements; and
    • Any supporting financial data.
  • GR will continue to support all municipalities to achieve the effective tax rate limit of 7:1.

The Honourable Don McMorris – Minister of Government Relations, Government of Saskatchewan