“It’s a difficult budget because of what’s happened with oil,” says Bill Madder, the CEO of the Association of Saskatchewan Realtors, which is calling on the provincial government to avoid raising the education property tax. “We have concerns that property tax is not a good way to raise revenues for government.”
The education tax is a portion of homeowners’ property taxes that is allocated to funding education programs in the province. That portion was reduced to just less than 50 per cent of the property tax, but the association feels that raising it, especially in the current economic environment, would be a slippery slope.
“Even this is a temporary measure, it becomes more difficult to reduce it,” Madder says. “We feel a tax on property is a capital tax and it impacts the economy more so than other taxes.”
Madder says the increase could shut potential buyers out of the market, forcing agents to compete for a smaller pool of potential buyers. The increased tax could also lower the budgets of those buyers carrying on with their search.
A worse-case scenario, however, involves homeowners being forced to sell once higher taxes make month-to-month carrying costs too much to handle.
“There are a number of factors that impact the market,” he says. “Taxes impact the amount of money that’s available for the purchase of a home. Most people’s house payments consist of principal and taxes, so if taxes go up, it reduces the amount people can afford.”
However, Madder acknowledges the several impacting factors on market conditions but says taxes for education should still remain low.
“[Education] is an area we feel should be paid by the government,” he says. “They might find better ways to use property taxes – infrastructure and other targeted measures that are in line with property. We would prefer that property not be the source for revenue when they need it.”
One Realtors’ association is pleading with the provincial powers that be to avoid increasing a certain property tax – a move the organization says could cost homeowners and agents alike.