Winnipeg Free Press - PRINT EDITION

Business owners feel $16-M pinch as province adjusts taxes

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WAS it an unexpected provincial tax windfall of $16 million or a provincial cash grab from business owners hidden in the confusion of reassessment?

Neither, says the department of education, but it still put an additional $16 million in the government's pocket, which in turn has been transferred to school divisions' operating grants.

Despite a property tax freeze in the city and in most city school divisions, business owners in Winnipeg are paying a whopping 19.3 per cent average increase in the education support levy (ESL) which the province collects on property tax bills.

That's $14,625,771 more than the province collected from business property owners in Winnipeg last year to hand over to the province, says city assessor Nelson Karpa.

Across Manitoba, it will be about $16 million in total, says deputy education minister Gerald Farthing.

"The $16 million is additional revenue to the government and it goes back to the school divisions as funding," he said in an interview.

Because the value of commercial properties has gone up less than the value of residential properies, some of the share of school property taxes paid by business has shifted to homeowners -- whose taxes will go up even if the overall amount of tax dollars collected has been frozen.

As an example, that's $33 on a typical house in Pembina Trails School Division.

"The government estimates that the amount raised by school divisions (in school property taxes from commercial property owners) will go down by about $16 million" because of reassessment, Farthing said, and be picked up by homeowners.

The province set the ESL mill rate to recoup that $16 million. "The mill rate is set to maintain what's considered fair... to try to be fair to everyone. It kind of evens out and offsets the impact," he said.

Education Minister Nancy Allan talked about the ESL issue in her major budget speech in the legislature, Farthing said. She had not mentioned it when announcing public education funding in January.

Bottom line: the business sector should pay about the same dollars overall as in 2009, homeowners pick up $16 million in property taxes previously paid by business, the province gives that extra cash to the school divisions for higher operating grants than it could otherwise have afforded.

"(There) was a large increase in the amount to be collected through the ESL," said Karpa. It can be confusing and misleading to try to figure out what's changed on an individual tax bill, with mill rates substantially different than a year ago and everyone's property values changing significantly, said Karpa.

"I have not received many calls on this specific issue. I think in general, property owners tend to look at the bottom line, and did not appreciate how the municipal taxes moved different from the ESL," Karpa said.

Businesses have been calling in confusion about their tax bills, said Chuck Davidson, communications director for the Winnipeg Chamber of Commerce. "It's been a combination of property taxes, business taxes, and the ESL.

"People don't pay very close attention to the tax bill and think it's normal," Davidson said.

Small business owner Dan Van Kyssel was shocked when he received his property tax bill, but incorrectly initially blamed Seven Oaks School Division.

Turns out his ESL increased by $527.66.

"That's crazy, that's just wrong. I'm going to fight whoever is applicable to this," he said.

Republished from the Winnipeg Free Press print edition August 27, 2010 A11

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