By Peter Squire
The temperature is rising, and so are our expenses, as by now you’ve probably received the City of Winnipeg’s annual property tax bill in your mailbox.
Councillor Matt Allard, chair of Winnipeg’s infrastructure renewal and public works committee, recently commented in the Winnipeg Free Press with reference to the significant and rather daunting challenge facing the city in funding major infrastructure projects, such as the replacement of the Arlington Bridge, Route 90 widening and the Chief Peguis Trail extension west, to name just a few.
What was heartening from a property taxpayers’ point of view was Allard’s recognition that property tax hikes are not the way to go, as they will clearly put a number of property owners in a very precarious position. He said that for many people to support the kind of property tax increases required to pay for financing these types of infrastructure projects over the next 10 years, it “would mean the difference between buying groceries and paying their mortgage.” It is clear to him, at least, that it’s necessary to prioritize what the City can reasonably afford to do while pursuing other options to fund infrastructure, including funding support from other levels of government.
The same week Allard spoke about funding infrastructure, former City Councillor Mike Pagtakhan presented at the standing committee on infrastructure renewal and public works, and spoke to the importance of replacing the Arlington Bridge. What was interesting was Pagtakhan’s statement that Winnipeg has gone from being one of the highest property tax cities in Canada to the lowest. Quite a statement!
If you look through civic documents such as Community Trends and Performance Report, or even the 2019 preliminary operating and capital budget report, you will see Winnipeg cited as the lowest of other major cities across Canada based on what they say are either average or median house values for municipal property taxes. However, a number of major Canadian cities have higher average or median house prices than Winnipeg, so is it really a true and fair comparison of property taxes?
The other reality of our property taxes is that we also pay education taxes like most other Canadian cities. It was certainly noted by Mayor Brian Bowman this year when he wondered why the City of Winnipeg includes education taxes on its property tax bill. He was concerned about the confusion home owners may have of potentially believing the total property tax bill is only for city services.
Interestingly enough, other cities have had this issue, too, and in the case of Regina, where at one time education taxes on property were the highest in the country, until reforms were made, they make it abundantly clear that education property taxes are different from municipal property taxes. The City of Regina sends out a separate page in the four-page property tax bill notice entitled “Education Property Tax Notice”. It explains that while the mill rate is set by the Province, the taxes are collected by the City before being forwarded to the Province.
So where does Winnipeg place when you compare its total property tax bill based on the same values? Quite frankly, it does not fare well! In the 2018 Altus Group Canadian Property Tax Rate Benchmark Report, which examines both commercial and residential tax rates across Canada for major urban centres, Winnipeg is last at $12.12 per $1,000 of assessment. The average is $8.82 — with Vancouver lowest at $2.47. On the commercial side of the equation, Winnipeg fares better with its cost of $24.05 per $1,000 of assessment being slightly below the average of $24.21.
Some observations in the Report are relevant to Winnipeg. Quebec City experienced a noticeable drop in its residential tax rate due to the Quebec Government introducing standardized school board tax rates across the province (the only exception is Island of Montreal) with the lowest school board tax rate being imposed on them all. Another reason cited for lower residential rates is the increases in assessment bases in Toronto and Vancouver. It states, “Larger assessment bases allowed Toronto to decrease residential tax rates for the tenth consecutive year”.
Another report that was done last year by a company called Zoocasa, where they compared total property tax rates for 25 major Canadian cities, showed Vancouver first and Winnipeg in 21st spot. It showed sample property taxes based on different price points.
This prompted WinnipegREALTORS® to do its own total residential property tax chart based on various price points ($200,000 plus increments of $50,000 to $500,000) and the residential tax rates for each city. Cities were chosen more on the basis of being of similar size or significant urban centres within their province.
As you can see from the chart, Winnipeg is on the higher end of the property tax spectrum, with Hamilton at the top. It is important to note Winnipeg’s total property tax does not include the removal of the $700 education property tax credit since it is a comparison of other cities’ assessment rates without factoring in any credits. These tax rates were provided by the municipal assessment departments to determine what taxes will be paid at the different price levels. If you reduce Winnipeg’s property taxes by $700 which principal owners are eligible to receive, the lower assessed price levels starting at $200,000 become far more competitive with other cities.
While more work needs to be done to review how the municipal/education split works out for all of these cities, it is safe to say Winnipeg may well have the highest ratio of education taxes in relation to your total property tax bill at around 50 per cent depending on what school division you live in. For a house assessed in 2018 at $333,000 in the Louis Riel School Division, the school mill rate was slightly higher than Winnipeg’s. Where Winnipeg becomes more expensive in the end is the school portion of your bill receives a $700 education property tax credit for a principal residence, whereas there is no credit for municipal, and there is the additional frontage levy that you are charged for street renewal.
In the City of Edmonton, the split between municipal and education taxes for a property assessed at $399,500 in 2019 is 71/29. The split from a sample property tax bill in Regina assessed at $411,900 in 2018 is 63/37.
All that is being said in this column is that we have to be careful about how we talk about our property taxes without qualifying our statements. An argument may be made for comparing property taxes more on the typical or representative home — as the City of Calgary does in its annual residential property taxes and utility charges survey (awaiting results of 2018 survey) — but the bottom line for most property owners is the total tax bill that they have to pay.
Speaking of property taxes, for those of you not on the City of Winnipeg’s Tax Installment Payment Plan (TIPP), the deadline for paying your property tax bill is June 28.
Peter Squire is WinnipegREALTORS® Vice-President, External Relations & Market Intelligence.