Robert Murray Haig.

The exemption of improvements from taxation in Canada and the United States [electronic resource] : a report prepared for the Committee on Taxation of the City of New York online

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prominent real-estate man that approximately ten per cent, of the building
funds come from private sources, while life insurance companies and loan
companies divide the remaining ninety per cent, between them in almost
equal proportions, the insurance companies preferring the large loans. It
is possible to borrow for building purposes from fifty per cent, to sixty per
cent, of a conservative value of the land and the building.


In Calgary rents have until recently been extremely high. They have
now declined sharply — in most cases at least twenty per cent. — but it is
claimed that they are even yet above the normal level. Much of the build-
ing is attributed by the building inspector to the attraction of high rents
offered to those who would build houses.


Little information of value is available for judging the effect of the
tax system upon congestion. The assessor testifies that the system has not
operated to prevent a large number of people owning an extra lot for use
as a garden. But the standard lot in Calgary is extremely narrow, twenty-
five feet, and a house on a twenty-five foot lot may not exceed nineteen
feet in width. It is evident that if anything but a very small house is
desired, it is necessary to have more than one lot.

There are approximately 160,000 lots in the town. The total number
of buildings is 13,296. Approximately one-third of these buildings cover
more than one lot. Assuming that each of such buildings covers two lots,
it would seem that only about eleven per cent, of the lots in the town are
built upon.

If the population is accepted as 75,000, the density of population is 2.9
persons per acre.(l)

Home Ownership

According to the estimate of the assessor, approximately two-thirds of
the houses in the city are occupied by the owners and one-third rented.

Non-Resident Ownership

No information is available as to whether non-resident ownership of
land is increasing or decreasing. It is estimated by the assessor that at the
present time fully one-half of the total number of lots are owned by non-
residents and the great majority of the lots in the outlying subdivisions are
so owned.


In addition to the lots which are held for speculative purposes by non-
residents, a large number of lots are so held by residents. Approximately
one resident property owner in four owns an extra lot which he holds in

(1) Area, 25,920 acres.


the hope of a rise in value. There has been no movement thus far in the
direction of the surrender of holdings because of the pressure of the tax.


Because of the fact that Calgary contains a considerable number of
factories and industrial enterprises, it is in a better position to withstand
the strain of depression than many other western Canadian cities. Because
of its location, however, Calgary finds itself called upon to care for a num-
ber of transients who find the city an attractive stopping place before taking
the trip across the mountains. Calgary seems to share with Winnipeg the
distinction of being a centre for the transient unemployed. A considerable
number of the inhabitants of Calgary are employed in the Canadian Pacific
Railway shops located there and during a time of depression which affects
railway traffic the employment of these persons is, of course, affected.

The city has made every effort to prevent unemployment. During the
early part of 1914 there was no diminution in the amount of public works
under construction. Indeed, the city appears to have begun some work
which could well have been postponed in order to provide labor for men
who needed it.

A municipal labor bureau has been established which attempts to find
employment for those who desire it. Early in August there were registered
at this bureau the names of 6,300 persons who desired work. Of this num-
ber approximately two-thirds were citizens of Calgary and one-half property
owners. The services of the bureau were formerly free, but because of
objection on the part of citizens to expending money for securing places for
transients, fees varying from fifty cents to one dollar are now charged. It
will be noticed that the registration statistics indicate that nearly five per
cent, of the total population of the city have applied to the city to aid them
in securing employment. If a calculation is made of the number of persons
who are dependent upon these seekers for employment it will be seen that
even in Calgary the unemployment situation is extremely serious. In the
building trades conditions are especially deplorable. The oil boom seems to
have brought at least temporary prosperity to the unions of printers and
telegraphers, however. In August the painters' and musicians' unions
reported employment conditions fair ; but the following unions all reported
conditions dull: cigarmakers, carpenters, iron workers, moulders, machin-
ists, tilelayers, plasterers, laborers, and stone cutters.

It is evident that the city cannot continue to employ indefinitely the
large number of men on public works which it does now employ and
there seems to be little expectation among the citizens of Calgary that real
estate and building activity will increase m.aterially in the near future. In
the opinion of the superintendent of the civic labor bureau there is little
hope for a solution of the unemployment problem except through per-
suading the people to " go out on the land."


General Prosperity

The population in Calgary is ascertained by a police census made from
time to time by a house-to-house canvass. Such an enumeration, however,
has not been made for several years. The estimates of the population of
the city vary widely. The official estimate published in the municipal manual
gives the population at present at 90,000, but in August, 1912, the mayor of
the city estimated the population as between 75,000 and 80,000. Most of
the citizens who were asked about the question agreed that 90,000 was an
optimistic estimate and that the population probably did not exceed 85,000.
The population for a number of years is given in the following table :


1884 506 1909 35,000

1901 6,557 1910 50,000

1904 10,543 1911 55,000

1905 12,500 1912 70,000

1906 17,000 1913 85,000

1907 21,040 1914 90,000

1908 25,000

(1) Municipal Manual, 1914, p. 225.


1907 6,278 1911 17,006

1908 6,972 1912 23,736

1909 8,996 1913 33,875

1910 11,504


Public Public Separate

Schools. Schools. Schools.

1907 1,416 1911 4,578

1908 2,277 1912 5,815 458

1909 2,791 1913 6,983 624

1910 3.376

(a) The enrollment is for the month of October in each year. The data were
supplied by the school officials.


1907 $69,745,006.00

1908 64,815,227.00

1909 98,754,389.00

1910 150,677,031 .00

1911 218,681,921 .00

Jan $18,599,428.00

Feb 17,867,035.00

Mar 19,450,310.00

Apr 20,761,573.00

May 24,105,424.00

June 26,749,172.00

1912 Ouly 22,618,299.00

Aug 22,486,030.00

Sept 24,137,286.00

Oct 25,744,742.00

Nov 27,200,145.00

[Dec 25,772,859.00


(a) The data was transcribed from the records of the clearing house.






















Year ending June 30, 1900 $11,611.45

1901 13,974.40

1902 16.447.07

1903 20,976.40

1904 28,636.46

1905 39,981.03

'< " " 1905 53 408.73

Nine months ending March 31, 1907 .*..'. .... 53'.346 . 88

Year ending March 31, 1908 90.941 .05

1909 99,070.84

" - " 1910 125,749.04

1911 158,513.00

1912 229.036.79

1913 295,084.73

(1) The data are from the reports of the Postmaster General.

The foregoing data indicate that the years of transition, 1909, 1911
and 1912, were years of great expansion, economically.


Public opinion in Calgary is undoubtedly opposed to further reduction
of the assessment on buildings just at present. Moreover there is a move-
ment of some strength in favor of a return to a higher assessment. One
very interesting point is the moderateness of the claims of the single taxers.
As will be seen in their interviews they are very chary about assuming
responsibihty for present conditions in Calgary. Moreover their judgment
of the trend of public sentiment is such that they consider this a very bad
time for single-tax propaganda.

The cause of the single tax has had strong support in Calgary from
two daily newspapers, The Alhertan and the Herald.

Summaries of Interviews

A high municipal official :

A few years ago the sentiment in Calgary was very strong for the
complete single tax; but recently there has been a change in public


opinion. If a vote were taken now the people would be found not to
favor the scheme. Indeed, probably the present assessment of twenty-
five per cent, of the value of improvements would be found too low to
satisfy the desires of the people. It would really be better to tax build-
ings somewhat more than twenty-five per cent; forty per cent, would
be more satisfactory. There is considerable sentiment in the city for
a return to at least a seventy-five per cent, assessment of buildings to
pay for certain city expenses like those occasioned by the police and
fire departments. Thus far the system has had little effect upon

An alderman :

The present system is not a good one. A man should be taxed
according to his ability to pay. It is an " outrage " that owners of
business blocks escape. Land and buildings should both be assessed
at two-thirds value. The movement toward the single tax in Calgary
is due to the influence of men who own buildings. From a selfish
point of view I should favor the system because I own buildings. The
sources of loanable funds would be very slowly affected by the tax
system. There has been no effect upon building operations. I do not
know of a single case where a building was built because of the tax
system. Moreover, I have watched the city from the time it had a
population of only 4,000 and I am able to discern no effect at all upon

An alderman:

The present system seems to give general satisfaction except to a
few ardent single taxers, who want the whole tax on buildings re-
moved. There is no public sentiment of change either way at present.
The citizens in general seem to be well satisfied.

An alderman:

There is no good reason why buildings should not be taxed in the
same manner as land, and I believe that the citizens in general would
favor an increase in the assessed value of buildings. There is certainly
no possibility that the twenty-five per cent, of the value of buildings
at present assessed will be removed. Buildings require fire and police
protection and should pay for that protection. The system has not
operated to stimulate building in Calgary. It was applied in too small
doses here, however, to be a fair test. A low millage rate makes a
powerful appeal to the average tax payer and this is the factor of
importance in connection with the present situation.

An alderman:

Buildings should not be completely exempted from taxation at
the present time. An assessment of twenty-five per cent, of the value
of buildings is about just. Every building improves the value of the
adjacent property and every building begins immediately to depreciate.
Therefore tax concessions should be extended to buildings. The sys-
tem operates to stimulate building. It has really overstlmulated build-
ing in Calgary.

An alderman:

I do not believe in the entire single tax. A twenty-five per cent,
assessment of buildings is about right. People on the whole are very
well satisfied with this figure. Only a few radicals want the twenty-
five per cent, stricken off. The real single taxers are very scarce.


There is little probability that the twenty-five per cent, will be removed
for many years to "come. Buildings should contribute something for
police and fire protection, and there is no reason why big business
blocks bringing in revenue should not make some such contribution.
To place the entire load on land makes the burden too heavy for the
man who owns vacant property. The system operates to stimulate
building. I know of no particular cases, however, where buildings
have been erected because of the system. I notice that people are not
now " so anxious as they were to grab vacant property." Many of
the property owners of Calgary are embarrassed now by the heavy
land taxes.
An aldermen ; a single taxer :

The sentiment in favor of the exemption of improvements in tax-
ation is very strong in Alberta, particularly among the farmers. It
has had the effect of stimulating building in Calgary. I, myself, know
.of a number of buildings which would not have been built if there had
been full taxation of buildings. The main advantage of the system is
that it has a discouraging effect upon speculation.
A city official:

Only the fact that real estate values are increasing enormously
makes the single-tax system bearable at all. I bought a fifty-foot lot
and built a bungalow. I bought also a vacant lot next to it to use for
a yard and garden, hoping to keep it permanently as an open space. The
heavy tax on land made it impossible for me to continue to hold this lot
unimproved, and I find it necessary to sell.

I am a benefactor to the city for keeping that property open ; but
I must pay as great taxes as two citizens. Of two persons who have
lots of equal value the wisest man is he who puts the biggest building
on his piece of land. From this it would seem that the policy of the
city was to encourage concentration of population. On the other hand,
in its street-railway policy, the city seeks to disperse the population
over a large area in order that the workingman may have enough land
about his house for a yard and garden. Thus the city seems to be
proceeding along diametrically opposed lines. The single tax is popu-
lar ; any candidate for office who talks single tax is cheered to the echo.

A city official :

Buildings ought to be taxed for they are the direct cause of con-
siderable outlay, and should in all justice contribute something in the
way of taxes. Twenty-five per cent, is about right, and the assess-
ment will stay at that figure for a little while longer at least. Whether
it will go up or down then will depend largely upon economic condi-
tions. If the present depression continues, the percentage of assess-
ment is likely to go up. I have little sympathy for the general
philosophy of the single tax.

A city official :

There has been a distinct reaction against the single tax, and
further reductions in the assessment of buildings may not be expected
very soon. It will not come until another big boom arrives. At present
people seem very well satisfied with the twenty-five per cent, arrange-
ment. The citizens of Calgary are not land confiscationists in any
sense of the word. High tax rates do not appeal to them at all. The
assessment of land values only would of course be very attractive from
an administrative point of view.


A city official ; a single taxer :

The citizen's view on the question of the single tax depends largely
upon whether he owns business blocks or land. I happen to own a
large business block, but I favor land taxation on theoretical grounds.
I believe that the single tax does not work out in favor of the owner
of a big building, however, for the system operates to stimulate build-
ing, therefore introducing competition into the situation, which results
in lower rents. There has been some agitation for the elimination of
the twenty-five per cent, assessment on buildings, but the twenty-five
per cent, will not be eliminated until better times come.

A leading banker :

The system has had no effect upon credit conditions and has not
stimulated building. Indeed, so far as I can see, it has had no effect
at all.

A Board of Trade official:

The single tax in Calgary has proved itself an excellent advertise-
ment for the town. Practically every single-taxer in the United States
has written me a letter asking me how the system is working. Busi-
ness men who contemplate establishing themselves in Calgary always
make careful inquiry concerning the tax system, and prospective set-
tlers sometimes do. Few persons, however, are greatly influenced in
their decision to make Calgary their home by the fact that we have the
single tax.

A Board of Trade official :

The business men in general in Calgary are in favor of the system.
The great majority of the members of the Board of Trade would favor
a proposal to eliminate buildings from the assessment list and also one
to eliminate assessments on stocks-in-trade. These are at present very
low and should be wiped out altogether.

A newspaper editor ; a single taxer :

Public sentiment in Calgary is, on the whole, not favorable to the
single tax. This is because the people are not really informed on the
subject. Two years ago a movement was started to eliminate entirely
the assessment of buildings ; but the single taxers themselves withdrew
the proposal because it was apparent that it would be defeated. The
effects in Calgary have not been clearly defined. The effect on building
is not definite. I know of no building which has been constructed
which would not have been built except for the encouragement of the
tax system.

An editor ; a single taxer :

The overstatement of conditions in Vancouver by single-tax advo-
cates has on the whole been injurious. They are apt to be over-
enthusiastic and to think that if they can get a little concession it will
" lift them to Heaven." It is hard to trace the influence of the system
in Calgary. There seems to be no clearly discernible effects. Condi-
tions are so shifting that it is impossible to draw many conclusions.
At the present time the electors would defeat a proposal to eliminate
entirely the assessment of buildings. It had been planned to carry this
proposal to the people; but the proposal was withdrawn by the single-
taxers themselves because they felt that it would be defeated.

A lawyer ; a single taxer :

The examples of Edmonton and Vancouver had a great effect in
Calgary, and the support of the Alhertan was effective. There has


been no noticeable difference between conditions in Calgary before and
after the change in the tax system. The effects have been very slight.
The tax rate is bound to increase, for the value of land is decreasing,
and it will be difficult to restrict expenditure. However, this will not
result in a reversion to the old plan of taxation. At the present time
public sentiment is not in favor of eliminating the final twenty- five per
cent, of building assessment. But now times are hard and people are
afraid of the possible effects of any change. Ultimately the last
twenty-five per cent, will be taken off.
A dentist:

The community does not mind the system while the real estate
market is active, but " the single tax is Hell in hard times."

A real estate man :

The encouragement to building operations claimed for the single
tax is not needed. " There is no chance anyway that you will be able
to persuade enough people to build on every lot in western Canada."

An official in an organization of farmers :

The principle of the single tax was adopted too late in Calgary.
It was adopted at the height of the period of development and the
slump came almost immediately. Some people say that the single tax
caused the slump. It may have hastened it. I sometimes wonder
whether it is really doing any good. It is supposed to have the effect of
building up a city compactly, but it has had no such effect in Calgary.
Its main influence thus far has been " to hurt a lot of poor beggars
who were induced by real estate operators to buy outlying property at
a crazy price." It is the man's own fault if he has chosen to indulge
in this wild speculation, but that is cold comfort. The effect of the
system upon building operations is not clear.


3. The Towns

The tax situation in the small towns of Alberta is in some respects
unique. Here the land tax was forced upon the communities by a higher
authority. The wishes of the towns were not consulted by the Government
when the change was made in the Town Act in 1912.(1) Indeed the wishes
of many of the towns were entirely disregarded. In Saskatchewan, as
has been seen, (2) the land tax is put into operation only when the munic-
ipalities desire it. Moreover, the provincial statute provides that the transi-
tion must be gradual. In the cities of Alberta and in the municipalities
generally in British Columbia (3) the option as to whether the change
shall be made rests, in actual practice, with the locality, although the
municipalities must secure their ends through action by the legislature.
The result is that the various communities have adopted the single tax at
such times and to such degrees as seemed to them good. Under such an
arrangement changes were, of course, made only when there was every
indication that no ill effects would result. A debt of gratitude is due
to the Government of Alberta for conducting an experiment on different
lines. Instead of cautious steps toward the taxation of land values only,
taken at the expressed desire of the municipalities, the legislature of Alberta
in 1912, at one long leap, and upon its own initiative, placed all of the towns
of the province upon a single-tax basis. In the experiences of these towns
some interesting effects can be traced, effects which may be expected when
a change is suddenly made which alters greatly the incidence of the tax
burden in communities where economic conditions are approximately

The nature of the change made has already been described. (4) In seek-
ing to learn the effects of the change, two chief methods of investigation
were adopted. In the first place, a general letter was prepared and addressed
to the secretary-treasurer of each town, enclosing a questionnaire. The
replies of these municipal officials are analyzed and submitted herewith.
Secondly, personal visits were made to two of the towns, Leduc and Ponoka.
In addition, occasion was taken to inquire among public officials and politi-
cians of both parties in Edmonton and Calgary as to the operation of
the system in the towns. The list of questions enclosed in the letter to the
town officials was as follows :

1. Did the imposition of the Town Act of 1912 make necessary an
increase in your rate of taxation ? If so, how much ?

2. Did it make necessary over-assessment of land values ?

3. Did it make it impossible for you to carry out contemplated improve-
ments ?

(1) Cf. supra, p. 79 et seq.

(2) Cf. supra, p. 2)6.

(3) Cf. infra, p. 168 et seq.

(4) Supra, p. 79 et seq.


4. Did it make it more difficult for you to meet obligations already
assumed ?

5. Has there been any effect upon the selling values of land traceable
to the tax?

6. Has there been an increase in the lands forfeited for taxes ?

7. Was the change popular at the time ?

8. Is the verdict of public sentiment to-day favorable or unfavorable
to the system ?

9. Remarks.

In the pages which follow are given in full the replies received. (1)

(1) The answers are quoted exactly except that grammatical errors are eliminated.



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Online LibraryRobert Murray HaigThe exemption of improvements from taxation in Canada and the United States [electronic resource] : a report prepared for the Committee on Taxation of the City of New York → online text (page 13 of 31)