Opinion columnist Robert Thomas
One of the biggest questions I hear amongst regular followers of city council is, "who are these big businesses with deep pockets that “beat” their tax bill? Who isn’t paying their fair share?"
It's a good question; and to get to the bottom of it, I did a little research. It's true,
there is one business not paying their share and they're a biggie: it's WalMart.
Before I get into the total mechanics of what transpired, it needs to be noted that WalMart DID NOT “beat” their assessment; what they did was successfully and legally appeal their assessment value, thereby lowering their property tax bill, something every property owner has the legal right to do.
It's all spelled out in the Notice of Assessment that all property owners receive. It gives property owners the opportunity to file an appeal if they believe their assessment and the resulting property tax bill is not what it should be.
So what is this assessment value? Simply put, the assessment value is what the estimated value of a property is. A formula involving the property class (a percentage of value set by the Provincial Government) is applied to the assessed value, this result is then multiplied by the mill rate, set by city council, to get the actual municipal property taxes owing.
To set the assessment value, Moose Jaw contracts the services of the Saskatchewan Assessment Management Agency (SAMA), who use their expertise to establish property values. SAMA contracts it's services to other urban and rural municipalities in the province, but Moose Jaw is their largest centre. The city has not had their own in-house property taxation department for years.
In a series of appeals, WalMart was able to reduce it's assessed value by successfully arguing that SAMA had errored in the method on how they arrived at an assessment value.
SAMA set the value at $11,215,900 for Walmart, in 2013 and 2014, using an Income Approach – while the local Board of Revision used a Cost Approach to reduce the assessment value to $9,718,100 for 2013 and $7,916,000 in 2014.
Later, WalMart had their assessed value reduced to $6,872,800, in both 2013 and 2014, in an appeal decision by the Saskatchewan Municipal Board - Assessment Appeals Committee.
In what seemed like a hasty move to shift blame onto others, some on Council decided to "shoot the messenger".
One council member went so far as to criticize the local Board of Revision's competency, claiming they didn't understand the rules. It was an open criticism in front of TV cameras. A criticism the board doesn't have the power to respond to.
But is it true in this case? Is the criticism of the local board warranted? Sadly, no.
In it's July 27, 2016 written decision the Saskatchewan Municipal Board – Assessment Appeals Committee specifically pointed out the local Moose Jaw Board of Revision was correct in their interpretation and application of the Act, while SAMA was not.
Local appeals boards in Weyburn, Estevan and Yorkton were, like SAMA, also incorrect in their interpretation of the Act.
"In the Moose Jaw appeals, the Board was not mistaken in finding the Cost Approach should apply, but made a mistake in its calculation of the assessed values using the Cost Approach,” the final decision read.
It needs to be mentioned that WalMart successfully appealed it's assessment not only in Moose Jaw but in Weyburn, Estevan and Yorkton, as well.
To add even more shock, Canadian Tire was like-wise successful in appeals of their Weyburn, Estevan and Yorkton assessments. Coincidently all centres where WalMart and Canadian Tire successfully appealed their tax assessments are centres who contract out their property assessment services to SAMA.
Personally, I ask, could the question not be reversed in order to question SAMA’s competency? It's all very loaded, but in it's decision, the Assessment Appeals Committee did point to SAMA providing “poor and lacking data” in at least one part of the assessment process.
To make up for the losses in the commercial tax category, council continued with a policy of charging all properties in the class a surcharge. This year’s surcharge is 5% to all commercial property owners.
In an attempt to reduce the impact to Moose Jaw businesses, Councillor Brian Swanson unsuccessfully argued that “losses” due to successful tax appeals should be spread over all property owners and not just to commercial property owners.
Councillor Swanson lost this argument with Council members such as Chris Warren arguing to force all commercial property owners to pay a surcharge for lost appeals.
Ironically, Councillor Warren would go on to seemingly reverse himself later, by putting forth a Notice of Motion to have administration draw up a report to ease the tax load on commercial properties.
In effect, what Councillor Warren seems to be advocating for, in his Notice of Motion, is, in fact, shifting from commercial to residential property owners. What is being looked at is a reduction of the property tax burden on businesses, not by reducing total taxes collected by the city, but by shifting a greater percentage of the overall taxes to homeowners.
Why I digress though, is to demonstrate that Big Box tax decisions are not wilfully attempting to shift more of the tax burden to homeowners; there are other factors in play.
Walmart might now be rolling back their prices, thanks, in part, to a successful property tax case but, more ominously, the same advantage doesn't seem likely in the future for your residential tax bill.