Education Tax Rebate
IT IS THEREFORE RESOLVED THAT AUMA petition the Government of Alberta to provide tax rebates on uncollected education property taxes to the affected municipalities.
WHEREAS the Government of Alberta has the right to requisition education taxes from municipalities;
WHEREAS there is no provision in place for municipalities to get credits back from the provincial government for education property taxes not paid by their residents;
WHEREAS the Government of Alberta continues to requisition school taxes on delinquent accounts from municipalities each year whether or not municipalities have collected any education property taxes on those accounts; and
WHEREAS during an economic recession municipalities not only suffer losses from the inability to collect municipal property taxes but also from the education taxes that are not collected but must be paid to the provincial government. This results in other taxpayers covering the cost of the uncollected education taxes year after year.
An example of a situation where a rebate would be beneficial is when a municipality has a property for which the taxes are in arrears. If taxes levied each year are $5,000 combined for both municipal and education, the municipal portion would be $4,000 and the education tax would be $1,000 per year, equaling 20% of total taxes. Over a period of time, the municipality will get control of the property through tax foreclosure. However, the cumulative total of education property taxes paid to the province can be substantial during the period including the amount of time the property is in arrears, the foreclosure process, and the length of time the property is held by the municipality until it sells . Additionally, if the sale price of the property is not enough to fully recover all property taxes owing, this could result in a substantial loss to the taxpayers of the municipality.
If the provincial government does not reimburse municipalities for education taxes that they cannot collect from residents, the municipalities’ taxpayers that are diligently paying their taxes bear the burden of covering the costs of those not paying education taxes.
The Town of Spirit River respectfully asks for your cooperation in supporting this resolution.
A response from the Minister of Municipal Affairs in December 2020 stated:
“I appreciate your suggestion under Resolution 2020.B5 to provide tax rebates on uncollected education property taxes to affected municipalities. The Municipal Government Act (MGA) provides an effective tax recovery framework for the non-payment of property taxes on land and improvements, though there may be some costs and delays involved in these processes. It should also be noted that some municipalities collect interest on requisition amounts collected on the tax due date but not immediately submitted to the province. For example, a municipality may collect the taxes due from the ratepayer in June, but not make its final payment to the province until the end of December.
Given the extraordinary economic impacts of the pandemic, our government is proud to have reached an agreement with the federal government to provide funding to safely restart the economy. A portion of this funding, the Municipal Operating Support Transfer, is dedicated to municipalities. Our intention is that this funding may be used for incremental operating costs associated with the pandemic and actions taken in response to it, as well as budgetary shortfalls due to foregone or reduced revenues, such as property taxes.
I appreciate [this resolution has] been endorsed by AUMA members. However, at this time the government has no plans to significantly alter the current education property tax framework.”
Intent not met - further action will be taken.
At the April 9, 2021 Municipal Governance Committee meeting, Municipal Affairs’ ADM, Municipal Assessment and Grants Division, confirmed that the Ministry remains opposed to making changes to the current education property tax framework.
ABmunis highlighted the need for engagement by the province on all our resolutions related to property assessment and taxation in our response to an MGA Red Tape Reduction Survey on Assessment and Taxation sent to Municipal Affairs on December 13, 2021.
ABmunis has previously advocated for changes to the regulation and administration of education property tax based on member adopted resolutions including:
Further advocacy efforts will be recommended to the Alberta Municipalities Board by the Municipal Governance Committee.