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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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1913 187,351,170 00 (b) 72,068,350 00 259,419,520 00 40,279,460 00

1914 199,082,890 00 (b)81,708,450 00 280,791,340 00 44,153,270 00

(a) All figures except those for 1914 are from the Comptroller's Report for 1913.
The 1914 figures were furnished by Assessment Commissioner Harris.

(b) Figures represent two-thirds of full value.

(c) An assessment of $824,530 for territory added to city in 1906 is included.

Land values were rapidly increasing when the reduction in the tax on
buildings was made. The assessed value of land increased approximately
sixty per cent, between 1909 and 1910, the period of transition, and the
value of buildings, instead of decreasing, gained nearly nine per cent. The
assessment increased from $107,997,320 to $157,608,220. These figures are
somewhat misleading, however, unless considered in connection with the
facts in regard to degree of undervaluation. In 1909 and for many years
previous, according to the testimony of the assessment commissioner, build-
ings were assessed at approximately seventy per cent, of their value, while
land was assessed at seventy-five to eighty per cent. The practical result
of the change in the tax law in 1909 was to cause a fuller assessment of
land values. In hundreds of cases the values of buildings were left un-
changed but the land values were assessed from twenty to twenty-five per

(1) F. J. Dixon, op. cit.

(2) Cf. supra, p. 20.



27

cent, nearer full value. At the present time the land values, it is claimed,
are assessed at one hundred per cent, of their value.

The amounts levied upon real estate in each year since 1893 is shown
in the following statement:

TAX LEVIES



Municipal. School. Total.

1893 $284,419 68 $85,000 00 $369,419 68

1894 280,836 55 90,000 00 370,836 55

1895 292,839 60 94,000 00 386,839 60

1896 297,829 20 96,590 00 394,419 20

1897 302,318 11 98,090 00 400,408 11

1898 323,436 39 104,590 00 428,026 39

1899 313,854 81 117,930 00 431,784 81

1900 375,655 66 120,585 00 496,240 66

1901 421,745 72 126,975 00 548,720 72

1902 421,668 49 135,210 00 556,878 49

1903 505,269 09 158,823 00 664,092 09

1904 526,89148 172,220 00 699,11148

1905 849,927 96 210,000 00 1,059,927 96

1906 1,005,133 15 241,800 00 1,246,933 15

1907 1,145,603 45 357,000 00 1,502,603 45

1908 1.183,186 05 360,000 00 1,543,186 05

1909 1,206,518 15 415,000 00 1,621,518 15

1910 1,226,645 83 476,430 00 1,703,075 83

1911 1,693.385 04 595,500 00 2,288,885 04

1912 1,807,403 52 766,000 00 2,573,403 52

1913." 2,385,37163 990,000 00 3,375,37163



The tax rates on real estate have been as follows :

TAX RATES

(Mills) (Mills)

1893 19.60 1904 17.00

1894 19.60 1905 19.70

1895 20.00 1906 17.90

1896 20.00 1907 16.00

1897 20.00 1908 15.00

1898 21.50 1909 15.00

1899 21.25 1910 10.80

1900 23.25 1911 13.25

1901 20.50 1912 12.00

1902 23.25 1913 13.00

1903 21.50

From these two tables it will be seen that, although the sum raised by
the real estate tax increased from $1,621,518.15 to $1,703,075.83 in 1910, it
was possible, because of the remarkable expansion in the tax base, to reduce
the rate from fifteen to 10.80 mills. Under these circumstances it is not
remarkable that the change should have excited little comment or caused
little disturbance outside the assessor's office.

There has been, of late, an increasing amount of uncollected taxes until
in 1913 the item amounted to approximately one million dollars. The



28

arrears,(l) as they stood on April 30th of each year since 1893, are as
follows :

UNCOLLECTED TAXES

1893 $239,103 59 1904 $248,720 01

1894 293,202 80 1905 312,834 30

1895 300,022 27 1906 442,319 96

1896 347,447 15 1907 565,295 48

1897 329,125 75 1908 816,231 74

1898 261,099 82 1909 871,206 74

1899 293,559 41 1910 751,887 23

1900 319,708 60 1911 798,888 63

1901 273,271 81 1912 834,422 46

1902 285,217 98 1913 984,556 71

1903 204,104 65

The tax rate is usually struck about July 1st. In 1913 the taxes were
demanded on October 15th. A two per cent, discount was given in case
the taxes were paid by November 18th and one per cent, if paid by
December 3rd. After December 31st, three-fourths of one per cent, per
month was added as a penalty. This penalty is but slightly in excess of the
current interest rate, which probably explains the size of the arrears.

DATA FOR JUDGING THE EFFECTS OF THE SYSTEM

Building Operations

The statistics of building operations are shown in the table \vhich

follows :

BUILDING STATISTICS

Permits. Buildings. Cost(b).

1900(a) 530 638 $1,441,863 00

1901 630 820 1,708,537 00

1902 822 973 2,408,125 00

1903 1,227 1,593 5,689,400 00

1904 1,768 2,268 9.651.750 00

1905 3,349 4,099 10,840,150 00

1906 3,487 4.204 12,625.950 00

1907 2,433 2,837 6.309,950 00

1908 1,544 1,771 5,516,700 00

1909 2,498 2,942 9,226.825 00

1910 3,291 3,916 15,116,450 00

1911 3,671 4,398 17,716,750 00

1912 4,489 5,339 20,563.750 00

1913 4,113 4,825 18,593,350 00

19145 first 5 months 8,528,200 00

j last 6 months 2,857,500 00



(a) The statistics in each case are for the year ending December 31st. The
number of buildings and the cost for the year 1906 and after are taken from the
records of the building inspector. The other figures are from a phamphlet of the
Industrial Bureau. There are no totals in the building inspector's books before 1906.

(b) Cancellations eliminated.

It is estimated that there were approximately three hundred apartments
in Winnipeg in 1914.

(1) These items evidently include the arrears of special assessments as well as
business and real estate taxes.



29

There is a limitation on building heights of 120 feet, unless special
provision is made for fire protection and special permission obtained from
the building inspector. ( 1 ) Moreover, the height of buildings is limited
to a multiple of least dimension of the base, as follows :

For buildings with skeleton frame, five times; with masonry
walls only, four times ; for buildings of mill construction, three times ;
with ordinary construction, two and one-half times ; frame buildings,
one and one-half times. This also applies to wings of buildings,
whose length exceeds two and one-half times their width, provided
no building shall exceed the maximum height established for its
respective class. (2)

The 120 foot restriction was passed upon the recommendation of the
building section of the Town Planning Committee of Winnipeg. Already
there are several buildings in the city which exceed the legal limit. There
is one building of each of the following heights: 192 feet; 164 feet; 159
feet; 148 feet; 146 feet; 143 feet; and 128 feet.

Congestion

The area included within the city limits is 15,287 acres, of which 422
acres are water. (3) The population in 1914 was 203,255. This means a
density of 13.7 persons per acre.

Home Ozvnership

The voters list for 1914 shows that 53.5% of the voters were owners
and 46.5% tenants. The data is as follows:

Number of owners 27,363

Resident 21,854

Non-resident 5,509

Number of tenants 23,768

Total 51,131

The relative number of owners was slightly greater in 1913 (54.4%).
The 1913 figures are as follows :

Number of owners 26,058

Resident 20,846

Non-resident 5,212

Number of tenants 21,793

Total 47,851

Employment

The employment problem in Winnipeg was very acute in the summer
of 1914. There was a great over-supply of labor, particularly in the build-
ing trades. This condition was attributed to the fact that there was con-
siderable building activity in Winnipeg while there was exceedingly little
activity in other cities. The newspapers and the official Gazette had

(1) By-law 7528, ss. 57 and 86 (c). Passed January 13, 1913.

(2) Ibid., s. 86.

(3) Municipal Manual, 1914, p. 41.



30

featured the fact that building was brisk in Winnipeg, with the result that
thousands of artisans were attracted by the prospect for work. Moreover,
Winnipeg is naturally the first stopping point for newly-arrived immigrants
on their way to the West, and this stream, artificially stimulated by adver-
tising, contributed its share to the unemployment problem. The situation
was so serious that measures were being discussed to discourage people from
coming to the city. The Builders' Exchange went so far as to request the
city council to forbid the publication of building statistics, on the ground
that such " evidences of Winnipeg's rapid growth serve as a lure to draw
labor and employers of labor from other parts of the country in such
numbers that the market is congested."(l)

General Prosperity
POPULATION (a)

1893 32,119 1904 67.265

1894 34,954 1905 79,975

1895 37,124 1906 101,057

1896 37,983 1907 111,729

1897 38,733 1908 118,252

1898 39,384 1909 122,390

1899 40,112 1910 132,720

1900 42,534 1911 151,958

1901 44,778 1912 166,553

1902 48,411 1913 184,730

1903 56,741 1914 203,255

(a) Report of the City Comptroller, 1913, p. 128, and Assessment Commissioner
Harris. The figures are for January 1st of each year.

BANK CLEARINGS (a)

1904 $294,601,437 00 1909 $770,649,322 00

1905 369,868,179 00 1910 953,514,287 00

1906 504,585,914 00 1911 1,172,762,142 00

1907 599.667,576 00 1912 1,537,817,524 00

1908 614,111,80100 1913 1,634,977,237 00

(a) Municipal Manual, p. 127.

GROSS POSTAL REVENUE(a)

Year ending June 30, 1900 $137,334 27

1901 128,480 13

1902 169.029 52

1903 201,906 62

1904 256,519 17

1905 319,378 22

" " " 1906 419,012 32

Nine months ending March 31, 1907 374,020 23

Year ending March 31, 1908 555,466 89

" " " 1909 580,385 74

" " '• 1910 695,051 27

" " " 1911 836,931 15

1912 1,017,829 60

1912 1,169,17105

(a) Compiled from the reports of the Postmaster General.



(1) Winnipeg Tribune, June 23, 1914.



31

Inquiry was made of a number of public officials, business men and
citizens as to what the effects had been of the reduction of the tax on build-
ings in 1909. The universal testimony was that there had been no discernible
effects. There seems to have been no disturbance whatsoever to credits, no
perceptible effect upon rents, speculation or anything else. The change was
made with so little jar that most citizens, it is said, were not aware that any
change had been made.



32

C. SASKATCHEWAN
The Province

Saskatchewan, the second of the prairie provinces,^ies directly to the
west of Manitoba. It is predominantly an agricultural region and has only
a few moderately large cities. In all the municipalities, special concessions
have been extended to improvements, but the steps toward the land tax have
been short ones and, because of the principle of local option adhered to, have
always been taken at propitious times.

The provincial treasury does not depend upon real estate or property
taxes for its support. Of the revenue in 1913 ($4,668,753.70) more than
one-third was received from the Dominion as subsidies. The telephone
department supplied $496,635.26. The payments under the Land Titles
Act amounted to $452,002.49. The Agriculture Department contributed
$263,216.05, of which $232,961.32 was received from the sale of butter and
eggs. Liquor licenses, stamp taxes, fees and various types of corporation
taxes supplied most of the remainder.

Although no property taxes are imposed for provincial purposes, the
provincial authorities, as agents for the municipalitiesy administer several
types of land taxes for the benefit of the localities. This is true of certain
school taxes, the hail insurance tax, and the general taxes in the local
improvement districts. The last two are described in a later section. ( 1 ) A
brief explanation of the levy for school purposes is inserted at this point.

Under the terms of an act passed in 1907(2) an annual tax of one
cent per acre is levied upon all land not included " within the limits of town
and village school districts." Crown lands held under lease for grazing
purposes are subject to a charge of one-half cent per acre. The proceeds of
this tax go to the provincial treasurer to the credit of the " Supplemen-
tary Revenue Fund " and are later reapportioned for educational purposes
according to the following plan :

(a) Five per cent, for an agricultural college;

(b) Five per cent, for the University of Saskatchewan;

(c) Ten per cent, for secondary educational institutions; and

(d) Eighty per cent, for primary educational institutions.

The total collections from this tax during the year ending January 31,

1913, were $416,210.63. From the collections made during 1913-1914, the

following sums were reapportioned :

Agricultural college $21,410 31

University of Saskatchewan 21,410 31

Secondary schools 30,524 50

(1) Infra, pp. 33, 34.

(2) 1907, c. 3 ; Rev. Stat., 1909, c. 37.



as

Rural schools :

2,346 school districts, $120 each $281,520 00

381,692 days attendance, 20 cents per day 76,338 40

357,858 40

$431,203 52
The Municipalities

The following types of governmental organization are in force in the
localities of Saskatchewan : the city (minimum population, 5,000) ; the
town (minimum population, 500) ; the village (minimum population, 100) ;
the rural municipality ; and the local improvement district.

The number of organizations of each type in the province on April 30,
1914, is shown in the following statement :( 1 )

Cities 7

Towns 71

Villages , 288

Rural municipalities 295

Local improvement districts 25

The tax systems of these municipalities will be taken up in inverse
order.

Local Improvement Districts

The very sparsely settled regions on the frontier of settlement are
organized into local improvement districts. This is a purely temporary form
of organization. No rights of self-government are given, the business of the
district, including the collection of taxes, being administered by the provin-
cial department of municipal affairs. So soon as there is a population capable
of supporting local self-government rural municipalities are formed.

A tax of one and one- fourth cents per acre is levied in local improve-
ment districts for roads, fire guards etc. The slight importance of this
charge is indicated by the fact that the amount levied during the year ending
April 30, 1914, was only $44,775.50.(2)

The Rural Municipalities

Land only is taxed in the rural municipalities. Formerly the tax was a
flat acreage charge and the average amount levied in 1913 was five and
one-seventh cents per acre. In 1914 the tax was changed to a land value
basis. (3) The change was made without difficulty. The Saskatchewan
Association of Rural Municipalities indicated its approval of the measure at
the convention held in Regina in March, 1914.

This rule of valuation is laid down in the Rural Municipality Act :

Land shall be assessed at its actual cost value exclusive of any
increase in such value caused by the erection of any building thereon
or by any other expenditure of labor or capital. (4)

(1) Annual Report, Department of Municipal Affairs, 1913-14, pp. 12-13.

(2) Ibid., p. 12.

(3) Ibid., p. 8. Elevators on land which is exempt from taxation pay a fee of
fifty dollars for municipal purposes and one of twenty-five dollars for schools.

(4) S. 252o.




34

The taxes levied for municipal purposes in the rural municipalities
during 1913 were $1,975,300.75.(1)

In addition to the regular rates on land in the rural municipalities, there
was imposed for the first time in 1914 a new " surtax " on vacant land,
aimed as a blow against speculators and " land miners." This measure,
naturally enough, was enthusiastically welcomed by the settlers but bitterly
resented by the non-resident owners of land. The farmers formally endorsed
the measure at their convention but the non-resident owners sent delega-
tions to interview the Government and to protest against this and other
special charges. (2)

The law prescribes that " it shall be the duty of the council of every
rural municipality * * * annually to assess, levy and collect a tax of
six and one-quarter cents per acre " on the following classes of lands :

1. The land of any owner or occupant not exceeding 320 acres
which has less than one-quarter of its area under cultivation unless
such owner or occupant is an actual resident upon such land ;

2. The land of any owner or occupant exceeding 320 acres but
not greater than 640 acres which has less than one-quarter of its
area under cultivation;

3. The land of any owner or occupant exceeding 640 acres but
not greater than 1280 acres which has less than one-half of its area
under cultivation ;

4. The land of any owner or occupant exceeding 1280 acres but
not greater than 1920 acres which has less than one-half of its area
under cultivation ;

5. The land of any owner or occupant exceeding 1920 acres. (3)

Mr. A. J. Robertson, of the town and rural municipality of Davidson,
testifies that the surtax is having the effect of bringing many large holdings
into cultivation.

The dissatisfaction of the non-resident land owners due to the surtax
on uncultivated land is accentuated by the hail insurance tax. (4) Rural
municipalities and local improvement districts, upon the favorable vote of
the land owners at the annual election, may come under the provisions of
the act. This involves the imposition of a special acreage tax, the proceeds
of which are used to meet the losses to crops by hail. The rate applied is
four cents per acre, the maximum provided in the law. The grievance of
the non-resident owners finds its basis on two grounds. In the first place,
the non-resident is not in a position to benefit by the insurance fund because

(1) Tiept, Dept. Mun. Affairs, 1913-14, p. 11.

(2) They object to the hail tax and gopher tax also. The Square Deal (Toronto),
February, 1915. The investigator was shown a letter to a Saskatchewan real-estate
agent from a large non-resident owner, giving orders that all his Saskatchewan land
be sold because of the pressure of the special land taxes. The following is an excerpt
from the letter of a Saskatoon real-estate man :

Regarding the various acts passed by the Province of Saskatchewan for
collecting special taxes etc., would say that many more besides yourself are
kicking against these attempts at revenue on the part of the local legislature and
quite a number of amendments are being seriously considered.

(3) The Rural Municipality Act, ss. 3236, 323c.

(4) Statutes, 1812-13, c. 46, s. 5 ; 1913, c. 30.



35

usually his land is not under cultivation. In the second place, the law con-
tains a provision permitting residents to withdraw from the operation of the
act any number of quarter sections, provided the same is (a) grazing or
hay land inclosed by a substantial fence, or (b) an unpatented quarter sec-
tion held under homestead entry from the Dominion of Canada upon which
there are less than twenty-five acres under cultivation. As the result of
these discriminations the non-residents feel that they pay an undue share
of the insurance bill of the resident farmers.

In addition, the non-resident owners are irritated by the weed tax.
Under the provisions of this tax, a neglected piece of land may be entered
upon, the weeds cut, and the cost charged to the owner.(l) It is claimed
that this privilege has been abused in some cases.

It will be seen that this combination of laws in the rural municipalities
throws the entire cost of local government upon the land and makes
important discriminations in favor of the resident as opposed to the non-
resident owner. In this respect, Saskatchewan has taken the foremost
place among the provinces of Canada.

The Villages

Under the terms of the Village Act passed at the legislative session
of 1908-1909, " all real and personal property and income " were declared
taxable. (2) Improvements, however, could not be assessed at more than
sixty per cent, of their value. Among the exemptions granted appear the
following: personal property to the amount of $300, other than income;
the income of every person up to the amount of $1,000; household effects
of every kind, books and wearing apparel in use; and grain. (3)

An option is provided, however, on the question of the adoption of
the land tax only for municipal purposes in the following language: (4)

If two-thirds of the total number of resident electors in any
village petition the council therefor the council may by law provide
that the assessment in the village shall after a date to be fixed therein
be limited to an assessment based upon the actual value of all lands
in the village exclusive of the improvements thereon.

In 1913, 246 villages made an assessment for taxation purposes. Of
this number 61, or approximately one-fourth, took advantage of the section
of the law permitting them to exempt improvements from taxation. (5)
The number taxing land only is increasing, however. In 1909 only eleven
and in 1911 only seventeen villages were using the plan. (6)

In the villages, then, improvements are nowhere assessed at more than
sixty per cent, of their value and in about one-fourth of the villages are
entirely exempt from taxation.

(1) Rural Municipality Act, ss. 201-207.

(2) The Village Act, s. 179.

(3) Ibid., s. 180. Taxes on real estate may be used to offset the income tax.

(4) Ibid., s. 181.

(5) Letter from Deputy Minister J. N. Bayne under date of July 6, 1914.

(6) Rept., Dept. Mun. Affairs, 1909-10; ibid., 1911-1912, p. 8.



36

The Towns

The Town Act passed in the 1908-09 session of the legislature provided
that the taxes of the towns should be levied upon lands, businesses, income
and special franchises.(l) The exemptions included income to the amount
of $1,000, household effects, books and wearing apparel in use and grain. (2)
Improvements were assessed at sixty per cent, of their value. At the session
of 1910-11, the legislature amended the Town Act so as to permit a gradual
reduction of the tax on buildings. The section describing the mode of
assessment was made to read as follows: (3)

Land shall be assessed at its fair actual value and buildings and
improvements thereon at not more than sixty per cent, of their actual
value * * * . Provided that the assessment of buildings and
improvements shall not be in any year be reduced below the assess-
ment of the same for the previous year by a greater amount than
fifteen per cent, of the fair actual value of such buildings and im-
provements.

In order to ascertain the extent to which the towns are taking advantage
of this permissive legislation, a letter was sent to each secretary-treasurer,
asking for information on this point. Replies were received from 57 out
of the 71 towns. Two replies were so indefinite as to be unintelligible. Of
the 55 towns remaining, 42 reported that they had made no reduction in
the tax on improvements below sixty per cent. Three towns (Gull Lake,
Outlook and Saltcoats) were assessing improvements at fifty per cent.
Three towns (Melville, Radville and Yorkton) assessed them at forty-five
per cent. Two towns (Maple Creek and Sutherland) assessed at forty
per cent. Nakomis assessed at thirty-five per cent., Grenfell and Wilkie at
thirty, and Duck Lake and Humboldt at twenty-five per cent. Tabulated,
the results stand:

60% 42 35% 1

50% 3 30% 2

45% 3 25% 2

40% 2

^ Total 55

Thus, upon the basis of the data received it appears that less than one-
fourth of the towns have taken advantage of the permission granted by
the legislature to reduce the tax on improvements. Moreover, not one town
has taken full advantage of the provision and reduced the assessment the
maximum amount permitted. On the whole the towns of Saskatchewan
have acted in a very conservative fashion when called upon to decide whether
they desired the single tax.

In reply to the question " Does your municipality plan to make further
use of the powers given in the above act?" affirmative replies were received
from only ten towns. The replies were : Assiniboia, " Yes " ; Canora, " Yes,

(1) 1908, c. 17, s. 300 et seq. . ^ ,. .

(2) Ibid. Taxes paid on real estate might be used to offset the income tax.

(3) The Town Act, s. 302.



37

— probably to thirty per cent, of value after a year or two " ; Carlyle,
" Thinking of doing so " ; Fleming, " Contemplating " ; Kamsak, " Yes " ;
Nakomis, " Yes, if possible will reduce it fifteen per cent, each year until
wiped out " ; Outlook, " Yes " ; Qu'Appelle, " Yes, as soon as debenture
indebtedness will allow " ; Radville, " Yes, we are working toward the
single tax " ; and Wilkie, " Yes."

It should be borne in mind also that the real estate tax is not the only
tax imposed in the towns of Saskatchewan. Other sources of revenue, of



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 3 of 31)