The Town of Stony Plain is implementing a new taxation model.
During the Apr. 26 regular council meeting, council members voted to approve the latest Revenue & Taxation policy which states that a “tax rate split” will replace the current “tax revenue split.” The intent of this decision is to bring Stony Plain more in line with the tax split of Edmonton Metropolitan Region Board (EMRB) members.
“This will ensure fair and equitable distribution between the two classes due to the ability for non-residents to deduct property tax and pass on the cost of the service good that they are selling,” said Town Manager of Financial Services Teri Stewart.
The new tax rate split shall move to no greater than 1.40 between residential and non-residential tax rates. This means that for every $1 that a resident pays, a non-resident will pay $1.40. This rate split is not impacted by changes in assessment which administration said is a concern with the current 80/20 revenue split between residents and non-residents respectively. Additionally, there is a complexity of factors that go into the taxation revenue calculation. These include the assessment for different assessment classes moving in opposite directions and at different rates, assessment growth rates, and the differing impacts on taxation classes because of this.
The implementation of the new rate split will be staged over the next four taxation years (2021–2024). This will allow for the rates to be analyzed, reviewed and discussed again four years from now to ensure taxation fairness continues to be achieved. Coun. Justin Laurie questioned administration as to why the new policy does not state how exactly the Town plans to execute this staging. General Manager of Corporate Services Jennifer Boleski replied that administration has left it ambiguous in order to provide council with discretion when/if facing a financially burdening year.
“I think we do need to define in the policy what that staged incremental change will look like. It can be changed if something does occur where council feels that a change is deemed necessary. Leaving it out for the sake of it potentially being changed just creates a level of uncertainty,” said Coun. Laurie.
The objective of the Revenue & Taxation policy is to find a fair and appropriate balance between the residential and non-residential classes. If taxation is lowered for one class, it increases the taxes in the other class to offset the difference and collect the total taxation revenue approved by council in the Corporate Plan.
When the policy was first approved in 2013, it was designed to benefit residential properties by shifting the tax revenue burden to the non-residential class. Subsequent to the policy being implemented, the non-residential assessment class has grown at a faster rate than the residential assessment class and the 80/20 tax revenue split is no longer achieving the policy objective.
As non-residential growth has increased and residential assessment has declined, the amount of tax revenue residents contribute under the current 80/20 revenue split has increased. By applying the policy direction that non-residential properties pay 20 per cent of the total tax revenue, residential tax rates have increased to pay for 80 per cent of the tax revenue.
The Tax Rate bylaw will be discussed during the May 10 regular council meeting, when tax rates for 2021 will be set.
“I think this a good direction that the Town of Stony Plain is going. The tax split of 80/20 that was approved by council quite a few years ago has served its purpose. At this point in time, it is actually a detriment to members of the residential community which has not grown as fast as the commercial side. From what I understand, this [new policy] will help alleviate those issues and problems now and going forward,” said Mayor William Choy.