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OPINION: Stealth Provincial Tax Increase on Property Taxes




In the world of government budgets and taxation policies, what appears on the surface isn't always reflective of the reality beneath. The recent unveiling of the 2024-2025 Alberta Provincial budget, where what was purported to be a freeze in education property taxes has turned out to be a stealthy increase.


As the numbers have been crunched and the budget tabled, municipalities find themselves in the unenviable position of preparing to collect more in education taxes from residents' property tax bills.


In 2023, Alberta Municipalities pushed for the province to uphold the education tax amount at $2.5 billion. However, although the provincial government chose to maintain education tax rates from the prior fiscal year, the situation is more nuanced than it seems. The significant increase in property assessments across communities means that municipalities will now collect an additional $229 million from taxpayers through their property tax bills earmarked for the Education Tax. This makes a 9.2% increase in provincial education property taxes in 2024-2025.


At first glance, one might argue that by maintaining the education tax rate, the government is demonstrating fiscal responsibility and preventing an outright increase in taxes. However, the reality is far more insidious. The freeze in tax rates, when juxtaposed against the rising property assessments, will translate into a increase in property taxes. This stealth tax hike places an undue burden on municipalities, forcing them to collect additional funds without having a say in setting the rates.


While the province may claim that the educational portion of property taxes has been frozen, the reality is far more nuanced. Despite the freeze in tax rates, the rise in property assessments effectively nullifies any semblance of stagnation, resulting in a de facto tax hike for residents. This poses a considerable challenge for municipalities, which must navigate the fallout of increased taxation while addressing taxpayer concerns and meeting municipal needs.


The burden of collecting property taxes falls squarely on municipalities, placing undue pressure on local councils to manage the discontent that arises from higher property tax bills. Despite the province's role in determining property tax rates, it is the municipalities that face the ire of taxpayers, who often fail to distinguish between provincial and local responsibilities. As such, municipalities must brace themselves for the backlash from frustrated residents, who may wrongly attribute the entire tax increase to local governance rather than both the municipal and provincial decision-making.


In this scenario, effective communication becomes paramount for municipalities. Mayors, Reeves, and Councillors must proactively engage with residents to clarify the intricacies of tax policies and delineate their limited role in setting the entire tax rate. It is imperative to underscore the collaborative nature of governance and emphasize the provincial government's influence over property tax determinations.


Transparency in tax billing must be essential.


Just as consumers receive itemized energy bills detailing the components of their costs - including an itemized line for Federal Carbon Tax, maybe it's time for municipalities to start itemizing property tax bills, including a distinct line item for the provincial education tax - if they haven't already.


This level of transparency not only fosters accountability but also empowers taxpayers to understand where their money is allocated. And who to talk to about any potential increase.


Before you rush to criticize me, accusing me of being against the education tax, let me clarify: nothing could be further from the truth. It's crucial to acknowledge the vital role of the education portion of property taxes in supporting both public and separate school systems. This funding is essential for resources like teacher salaries, textbooks, and classroom materials. However, it's unfair for municipalities to bear the sole burden of collecting these taxes, particularly when they have no control over the tax rates set by the province.


In essence, the issue at hand transcends mere fiscal matters; it speaks to the principles of accountability, transparency, and equitable governance. As taxpayers, we have a right to understand how our money is allocated and to hold our elected representatives accountable for their decisions. Conversely, policymakers must acknowledge their responsibility to enact fair and transparent tax policies that prioritize the well-being of all citizens.


The purported freeze in education property taxes in Alberta is not merely a semantic quibble; it represents a fundamental breach of trust between government and citizens.


Municipalities find themselves caught in the crossfire, forced to navigate the fallout of stealth tax increases while shouldering unwarranted blame.


Moving forward, proactive communication, transparency, and collaborative governance are essential to address this issue and restore faith in our democratic institutions. Only through accountability and transparency can we forge a path toward a fairer and more equitable society.

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