Red Deer homeowners will likely face a steeper than expected property tax hike because of higher than anticipated provincial education taxes.
Red Deer city council passed first reading on Monday to an across-the-board municipal property tax increase of 5.05 per cent for residential, multifamily and business properties.
In January, council approved a 4.32 per cent municipal tax increase for the city’s residential property owners. This would help pay for a 2012 municipal operating budget, previously approved at $272.6 million.
But then the provincial government’s education taxes — which are combined with municipal property taxes — came in eight per cent higher than last year’s.
To keep Red Deer’s residential property tax increase at 4.32 per cent, multi-family and businesses properties would have had to be taxed at a higher rate — 8.41 and 5.74 per cent respectively, said city manager Craig Curtis, who recommended a fairer formula.
Most city councillors agreed with Curtis’s proposal for a more equitable, across-the-board solution.
In an eight to one margin (only Coun. Frank Wong stood in opposition), council voted to spread the increase evenly by 5.05 per cent across all three property classes.
If approved by council on April 30, this would mean 2012 taxes for local properties with a $300,000 assessed value would cost $127 more than in 2011 for homeowners, $128 for multifamily property owners, and $229 for commercial/business property owners.
By comparison, the unequal option would have meant homeowners would have faced an increase of $109, while multifamily property owners paid $214 more and business owners an additional $260.
While city administration previously recommended sticking with the 4.32 per cent residential increase, so as not to skew local expectations, Curtis successfully argued that a 5.05 increase was fairer, “more transparent,” and would not hamper development.
City council was shown several publications’ Top 10 lists that put Red Deer among the most competitive centres for business in the province.
Several councillors, including Paul Harris, Dianne Wyntjes and Tara Veer, stated they supported the 5.05 per cent, in part because it was favourable to commercial activity and development.
Chris Stephan also did, but argued that multi-family properties should be taxed the same in future as businesses because these owners were making a profit from rental properties.
Only Wong supported the 4.32 per cent option for residential property owners, stating it was most beneficial since homeowners will also face higher utility bills.
Curtis put the blame for the 5.05 per cent increase squarely on the provincial government.
It would have been fairer to increase income taxes for Albertans than hit them with unexpectedly high education taxes, said Curtis, who noted income taxes are a more progressive taxation option since people pay according to what they make.