Apples to oranges? Comparing municipal tax rates in Alberta
By Al Beeber - Lethbridge Herald on October 28, 2022.
LETHBRIDGE HERALDabeeber@lethbridgeherald.com
A person in Lethbridge says they pay a certain amount of property taxes on their house while a friend in Calgary pays less for a home with the same value. They’re unhappy about it and wonder why.
The matter of property tax comparison came up at a recent Economic Standing Policy Committee meeting of city council during preliminary budget discussions about the potential tax increase that residents could face in the next four years. Councillor Jeff Carlson brought up the subject when he said he’d heard questions from residents wondering why they pay more here for property taxes than people in Cowtown who have homes of the same value.
City treasurer Darrell Mathews told Carlson a house of a median value between $300,000 and $400,000 here could be higher elsewhere in Alberta. The average value of a home in Calgary, for instance, is $500,000, comparable to $310,000 for the same home here.
An initial estimate is that the base budget tax hike could be 3.77 per cent annually from 2023-26 which amounts to an annual increase of about $94 per residence in Lethbridge. Council will be doing its final budget deliberations in November.
The base budget is the money that’s required by the City to maintain current service levels.
According to the City, Lethbridge is $177 below the provincial average when the total annual property tax on a median single value home across 21 other comparable provincial municipalities is considered.
In response to a question about the comparison of taxation rates, the City of Lethbridge told The Herald this week that comparing rates among municipalities isn’t as straightforward as people may think.
Simply comparing mill rates doesn’t address other matters – taxation is highly dependent on the level of services provided to residents which varies among municipalities, says the City.
Third-party operational reviews of the City of Lethbridge have shown that Lethbridge “has been observed to have a higher service intensity relative to other mid-sized Canadian cities.”
To calculate a mill rate, all municipalities use this formula: Total property taxes needed divided by total assessment equals the mill rate.
“The correct comparison is to take the average home value from each municipality and multiply by the mill rate to compare the total taxes paid on an average value home,” says a response from the city.
“Normally, the tax rate is expressed in mills (dollars in tax paid per thousand dollars of assessed property value) or sometimes as a percentage of the property’s assessed value. For example, a tax rate of 1.5 per cent on a home valued at $100,000 would require the payment of $1,500 in annual property taxes,” says the City on its website.
According to online personal finance encyclopedia wowa.ca, which has a tax calculator for Alberta, Lethbridge ranks third behind Camrose and St. Albert with the highest annual property taxes for a home valued at $500,000. According to that website, the property taxes on such a home here in 2022 is $5,454 which trails Camrose at $5,511 and St. Albert at $5,552. Calgary is at the bottom with a tax rate of $3,575.
According to recent data, Calgary has 521,257 houses. The most recent data The Herald could find for Lethbridge from Statistics Canada shows this city has a total of 22,330 single detached houses. There are also 2,125 semi-detached homes here and 2,050 row houses. The total occupied private dwellings by structural type of dwelling is 35,625.
The 2022 residential property tax rate in Calgary is 0.714980 per cent. The 2022 residential property tax rate in Lethbridge, according to wowa.ca, is 1.090840 per cent.
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