Unfair property tax for education costs shows need for overhaul of system

Property assessment complaints that demand the Saskatchewan Assessment Management Agency (SAMA) re-evaluate Moose Jaw assessments haven’t been answered at this point in writing.

The apparent injustice in Moose Jaw and the unexplainable assessments should require a review by the independent auditors who share offices with SAMA.

Another so-called white elephant sits in the room besides the weird assessment practices.

The funding method for education from property taxes is unjust and unfair. Property ownership bears no direct relationship to education.

The fact that education is funded at all by proper taxes arises from the early white settlement days in North America.

The settlers wanted their children to get an education and needed a fair and reasonable way to raise money for the school and teacher.

Everybody pretty well owned property so property tax became the means to finance education.

Over a century later, we are still stuck with this now outdated taxation model to fund education.

The only time Saskatchewan has done anything about this unfair tax was in 2009. Elected on a platform of reducing property tax burden for farmers, the Brad Wall government cut the property tax for education substantially.

The move took the provincial share of education funding to 51 per cent and reduced the burden on property owners.

A few years later, faced with another deficit budget, the Saskatchewan Party government took back some of the tax break.

Currently, Saskatchewan relies on property tax for over onethird of the education costs. In 2021, 37.5 per cent of the education budget was funded by property tax.

That same year, only B.C. and Manitoba relied more on property taxes. B.C. property taxes paid for 82.2 per cent of education.

In Manitoba, property taxes funded 57.4 per cent of the bill. Since then Manitoba decided to remove property taxes on education. Owners got a 37.5 per cent rebate last year, with 50 per cent this year. Plans are total elimination over 10 years.

The big debate in Manitoba concerns whether the province can afford to eliminate school tax from property, given the huge ongoing deficits.

Saskatchewan municipalities and leaders used to continually cry about this unfair tax for education.

Since the Wall government reduction, these parties are quiet as a church mouse on the issue.

A move to further reduce the education burden on property tax would have considerable positive features.

Property owners would be taxed more fairly. Reducing that burden would allow municipalities more leeway to fund projects from property taxes.

By doing that, the need for more funding from the province would be reduced.

It takes a lot of intestinal fortitude to make changes like reducing/eliminating property tax for education. Given this government’s tendency to rule based on polls, maybe it’s time for municipal leaders to put on the pressure.

Ron Walter can be reached at ronjoy@sasktel.net

Canada has 94% chance of recession this year, economic think tank says

There is a 94-per-cent chance that Canada could fall into a recession within the next 12 months, especially since the yield curve remains inverted, the Conference Board of Canada (CBC) predicts.

That prediction is one of several highlights and insights from the CBC’s latest Economic Quick Take newsletter as part of its regular recession risk forecast prognoses.

The Bank of Canada (BOC) has aggressively raised interest rates to tackle inflation, which has caused mortgage rate costs to increase and demands for homes to drop, the board said. Inflation has eased, but food, fuel and shelter costs remain elevated, affecting consumer confidence and spending.

“What happens in the U.S. impacts our economy in a profound way. Our model suggests that the risk of a U.S. recession within the next 12 months is 88 per cent,” the CBC continued. “If a recession occurs in the U.S., then this would likely spill over into Canada.”

The slope of the U.S. yield curve fell at the end of January, while excess bond premiums also declined, implying that risk appetite in the corporate bond market has waned, the newsletter said.

It’s not all doom and gloom because Canada’s labour force has been resilient, with job levels growing by 150,000 positions in January.

“Economic conditions would be much worse had the labour market not been tight,” it pointed out.

Jason G. Antonio - Moose Jaw Express

Negative outlook on markets

The Canadian yield curve inverted in August, while its slope has trended downward since then, which signals that investors have a negative outlook on financial markets, said the newsletter. The BOC’s aggressive tightening monetary policy can explain why investor sentiment has dampened recently.

Further, households continue to cope with elevated prices — especially at grocery stores and gas pumps — that have caused consumer confidence to decline and growth in consumer spending to decelerate.

“According to our Index of Consumer Confidence, 76.3 per cent of respondents felt that their future financial situations would be the same or worse — a 1.5 percentage points increase from last month,” the CBC said.

Since consumption makes up more than 60 per cent of the economy, if consumers continue to have a negative outlook on the economy and spend less, recession fears could become a self-fulfilling prophecy.

Unequal recessions

A recession is defined as a decline in economic activity, significantly below potential, affecting many sectors and lasting longer than a few months, the CBC continued. The board’s recession probabilities are broadly based on this holistic approach and not the typical two-quarters of negative growth approach.

“This definition allows us to explore the severity of past and future recessions — depth, breadth and duration.

Just because a recession might occur, it may not necessarily mean it will be severe,” the newsletter stated. Since the economy has remained overheated for several months, a recession could be seen as a possible correction period — with trade-offs between inflation and unemployment — before the economy returns to its normal state.

A mild recession

The CBC recently predicted that the economy would slow to a near stall during either the first or second quarter of 2023, affecting consumers and businesses alike. Yet, it believes households should make it through “relatively unscathed” since aggregate household savings should soften the blow.

There are downsides to the forecast, however, because if the Russia-Ukraine war escalates, the global economy could face a major downturn, the newsletter continued. Moreover, if inflation “becomes sticky,” households will have to endure a prolonged — but short-term — period of high prices, further dampening consumer confidence and spending.

The CBC’s forecast represents the performance of the entire economy over the medium term and considers future changes in monetary and fiscal policy, it added. Conversely, its recession tracker assesses the risk of such an event in the next 12 months using current financial and macroeconomic indicators — and therefore is not considered a forecast.