Saskatchewan’s effective tax rate reform

The current use and impact of tax tools in rural Saskatchewan

Altus has long opposed the ability of Saskatchewan rural municipalities to bypass the 9:1 mill rate ratio limit using tax tools. Currently, operators in rural Saskatchewan are subjected to higher mill rate ratios than in neighbouring Alberta, primarily due to the inclusion of tax tools.

Background on tax ratios and tax tools in rural Saskatchewan

As background, previous Saskatchewan government regulations obligated rural municipalities to impose a 15:1 ratio between the lowest mill rate in the rural municipality (typically agricultural properties) to the highest rate (typically the Resource or Non-Residential property class). In recent years, that ratio was reduced to 9:1.

That is, for every $1 in property tax prescribed by the lowest tax class, the highest rate tax class could pay up to $9.

Comparatively, Alberta has a legislated maximum ratio of 5:1

More significant than the difference in the Saskatchewan/Alberta ratio is that Saskatchewan rural municipalities had the ability to include additional tax tools; Base Tax and Minimum Tax rates, allowing them to pass tax rate bylaws that far exceed the current 9:1 ratio.

For example: 2021 Municipal Mill Rate, rural municipality of Mervin, SK* - Current ratio 16:1

*From the municipal mill rate summary report found here.

The rural municipality of Mervin, Saskatchewan, shown above, is one of the highest tax rate ratios; however, there are numerous rural municipalities with ratios that far exceed the current 9:1 ratio regulation by using base or minimum tax levies.

Saskatchewan to implement limit on tax tools and effective tax rate

In April 2022, a new tax tools limit was introduced by the Saskatchewan Ministry of Government Relations and will be effective in the 2023 tax year. The ratio is being reduced to 7:1 but, more importantly, municipalities are directed to specifically limit their “effective tax rate” to 7:1

2023 will obligate all rural municipalities to review their effective tax rates, the ratio between lowest and highest tax class and amend where necessary.

A copy of the announcement on this can be found here.