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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tive must come from the landowner. Thus the provincial government escapes
the expense of any assessment at all. But the owners of these outlying tracts
have thus far shown little disposition to seek a high initial valuation for their
lands. The ofiicials feel that this is because of carelessness, and they antici-


pate loud complaint when the year of grace shall have expired and the
fifteen dollar minimum is enforced.

To assist in the administration of the law, the secretary-treasurer of
every municipality is required to furnish the registrar of land titles with a
copy of his assessment roll as finally revised (Sec. 5, sub. 1). The regis-
trar must then note the assessed value upon the certificate of title of each
parcel of land (Sec. 5, sub. 2). Payment of the tax is made a necessary con-
dition to the registration of the transfer (Sec. 6). No tax is levied upon
the registration of any land grant from the crown or upon the transmission
of the land of a deceased person to his heirs (Sec. 3, sub. 2).

To prevent fraud through misstatements of the purchase prices of
lands, it is provided, through amendments to The Land Titles Act, that
both transferor and transferee shall take oath as to the consideration
involved (Sec. 117, sub. 2). Moreover, if the registrar is not satisfied
that the sworn statements are correct, he may cause an independent valua-
tion to be made, which shall be binding for the purposes of the act (Sec.
117, sub. 4). It is the opinion of the ofificials that some misstatements
are made in the transfers in spite of these provisions, but they feel that
these are not of particular moment. " If the value is not caught this time,
it will be the next " is their attitude.

During the two months in which the law was in operation in 1913,
$5,446.50 constituted the receipts from the increment tax. The estimates
for the year 1914 counted upon $210,000 from this source, but the receipts
for the first six months of the year amounted to only $21,476.70. The
assessments adopted under the terms of the act as the initial level from
which to measure additions in value were very high, and the present depres-
sion in real estate has prevented the law from being an efificient revenue
producer. With a return of real estate activity it is expected that the tax
will become of very much greater fiscal significance.

The Wild Lands Tax

Late in 1914 the legislature of Alberta passed an act levying a special
tax for provincial purposes on "wild lands." (1) A rate of one per cent,
was imposed upon the value of all land in the province which was not
specifically exempted. The most important exemptions are : land for which
homestead entry has been made ; land held under grazing lease from the
Dominion and actually used for grazing purposes; land within the limits
of an incorporated city, town or village; enclosed land used for grazing
purposes to' at least the minimum degree specified in the law (one horse
or head of cattle or three sheep to each ten acres during six months of
the preceding year) ; land owned by a bona fide farmer, actually residing on
some portion of the same, to the amount of 640 acres ; and the land of any
owner where one-fourth of its area is under cultivation.

(1) Statutes of Alberta, 1914, c. 3 (assented to October 22, 1914).


The section describing the mode of assessment reads as follows :

Land shall be assessed at its actual cash value as it would be
appraised in payment of a just debt from a solvent debtor, exclusive
of the value of any buildings erected thereon or of any other increase
in value caused by other expenditure of labour or capital thereon.

The law has been passed so recently that no information is available
as to its operation or effects.

The Municipalities

There are five distinct types of local governments in Alberta possessing
power to levy taxes. (1) The six cities within the province operate under
special charters. The towns, villages, local improvement districts, and the
rural municipalities operate under general laws. In all of these munici-
palities there is discernable a strong tendency toward special land taxation.
This tendency has been encouraged by the Provincial Government through
ready acquiescence to changes in the special charters and the general laws>
designed to carry the various local governments as far as possible toward
the land tax ideal.

The Cities

In Edmonton, in Medicine Hat and in Red Deer, the taxes are confined
almost entirely to land values. Calgary, the largest city in the province, in
addition to taxing land, taxes buildings at twenty-five per cent, and personal
property at sixty-six and two-thirds per cent, of full value. Wetaskiwin
and Lethbridge tax personal property and improvements as well as land.
The situation in Calgary and in Edmonton is reserved for full treatment. (2)

Medicine Hat is a city of 16,000 inhabitants. In 1913 its total assess-
ment was $20,393,950; the sum raised from taxes was $284,059.00;
and its debenture debt amounted to $3,563,360.41.(3) The change to the
land tax basis was made in Medicine Hat on January 1, 1912.

Red Deer is a settlement with a population of 3,500. Its total assess-
ment in 1913 was $4,383,380; its taxes the same year amounted to $78,334.-
62; and its debenture debt was $368,427.70.(4) Before 1912 land was
assessed at its full value, and improvements and personal property were
assessed at fifty per cent., stock and machinery of manufacturing plants

(1) This statement does not take into account the school districts. As has been
seen before (c/. supra^ p. 73), the school taxes in the territory lying outside of the
limits of any organized municipality are collected by the department of municipal af-
fairs, and consist of a tax on land levied on the acreage basis, except where the
assessment has been changed to the land value basis through petition. In the school
districts within the rural municipalities, school taxes are levied on the land value
only. In the village school districts, taxes may be levied on personal property for
school purposes. In 1913 the assessment of personal property was limited to sixty per
cent, of its value ; in 1914 this percentage was reduced to forty-five per cent. No
improvements may be taxed for school purposes. School taxes in the town school
districts are levied entirely on the land.

(2) Cf. infra, pp. 85, 108.

(3) Annual Report, Department of Municipal Affairs, 1913, p. 63.

(4) Ibid.


being exempt. In 1912 the tax on improvements was eliminated, but
personal property continued to be assessed. At the present time the city
derives its revenue from the tax on land values and a business tax.

Lethbridge is a city of 11,070 people, with a total assessment of $25,-
251,810, taxes amounting to $460,995.25, and a debenture debt of $3,229,646.
A surtax is levied on vacant land and special concessions are given to im-
provements. It had been the intention to eliminate entirely the assessment on
buildings in 1914, but this plan has been abandoned. The situation is
well summarized in the following letter from Mayor W. D. L. Hardie :

Replying to yours of December 29, 1914, received to-day, may
say that in 1912 times were very good here. The city was progres-
sing very rapidly, and our city council of that year thought they
should do what many of the other cities in the West were doing,
and amongst other things they were going in for single tax. Our
council was guided by Calgary which started in on the progres-
sional method. In 1912 our council decided to reduce the assess-
ment on buildings 33 1^ per cent. In 1913, the year I was elected
mayor, the council decided to reduce the assessment on buildings
another 33^^ per cent., or a total reduction of 67 per cent. This
was against my desire, because I felt we did not know enough about
single tax. I only knew the theory as propounded by Mr. George,
and had no practical knowledge of the single tax. I desired further
light. Dimly I see that single tax is the proper method, but " con-
ditions alter cases " is true of this as of other advances in civic
government. If the whole burden of taxation is put on the land,
our outside subdivisions will not pay their taxes unless a big revision
downward is made in the assessment. Again, our city covers a large
area (10.85 square miles) with many vacant lots between buildings.
The single tax met with approval from all parties when real estate
was moving, but now when things are quiet the real estate men are
kicking. At the same time I see no logic in their kick, excepting
that there is a superassessment on vacant lots in addition to regular
assessment within certain limits of the city.

In 1914, commission government came into effect. I was
elected for four years as mayor and commissioner of finance,
police, fire etc. I was still much in the dark about single tax, and
did not do anything in that line further than in 1913. However, in
the latter part of 1914 we appointed a citizen's committee of fifteen
burgesses in all sections and of all grades in our city. They had
very great difficulty in getting to an agreement, but finally practically
agreed that the assessment for 1915 should remain as it was in 1914;
i. e., 33y^ per cent, on buildings. The buildings value is about
$6,000,000, of which $2,000,000 is the assessment on buildings, the
balance of a total taxable assessment of $17,800,000 is on the land.
The following are " specials " not included in tax levy.

Answering your questions in the order put :

We tax on stock in stores for sale and plants of factories 66
per cent.

We have a superassessment area on which we tax twenty-five per
cent, of assessed value. This is on property not too far removed from
the business centers.

We also have a frontage tax on sewers, watermains and boule-


vards. In this respect our charter gives us the right to impose fifteen
cents per foot for all three, but so far we have never exceeded five
cents per foot for the three in combination.

The question of taxation is a most troublesome one. If you
have any literature that gives practical information, you would do
me a great favor if you would let me have some of it.

I am governed altogether by Davie Crockett's admonition, " be
sure you are right, then go ahead." My difficulty in connection with
single tax is to " be sure."

Wetaskiwin, the smallest city in the province, has a population of
3,000, with a total assessment of $2,863,769. Its taxes in 1913 amounted
to $64,776.20; its debenture debt was $288,675.61. Land, personal prop-
erty, and improvements are assessed for taxation, the latter at eighty per
cent, of their value. The charter provides that the assessment of buildings
shall be reduced to at least seventy-five per cent in 1915.

The Towns

To incorporate as a town, a community must have a population of 700
persons. Before 1912 this population limit was only 400. Moreover, some
towns have decreased in population, their status as towns nevertheless not
being disturbed. As will be seen from the following table, the towns vary
greatly in size, some containing as few as 400 and others as many as
3,000. In addition to the statistics on population the table presents data
showing the assessment, the taxes and the debenture debt of towns in 1913 :


Population. Assessment. Total Taxes. Debt.

Athabasca 2,000 $1,763,682 00 $38,773 60 $304 00

Bassano 1,500 1,670,360 00 31,736 84 151,600 00

Blairmore 2,200 547,652 00 5,476 48 58,709 43

Bow Island 500 402,295 00 11,200 00 40,000 00

Brooks 700 328,955 00 9,815 45

Camrose 2,100 1,701,725 00 53,229 60 177,823 52

Cardston 1,600 1,339,835 00 27,996 21 95,602 00

Carmangay 420 222,875 00 35,000 00

Castor 1,700 399,960 00 47,000 00

Claresholm 849,045 00 30,240 65

Coleman 189,301 00

Coronation 1,200 502,905 00 20,390 58 59,113 00

Daysland 154,580 00 3,654 00

Didsbury 1,000 234,140 00 13,351 00 23,500 00

Diamond City 400 151,746 00 1,235 68 3,200 00

Edson 1,700 2,854,857 00 1Z,(^1 44

Fort Saskatchewan 950 329,873 00 9,130 63 69,503 86

Gleichen 1,000 349,160 00 12,037 48 38,123 73

Granum 146,292 00 8,211 46

Grouard 1,201 918,625 00 25,830 80

Hardisty 600 155,457 00 7,012 56 8,895 18

High River 1,500 607,695 00 38,170 91 147,756 84

Innisfail 850 228,255 00 11,412 75 28,950 00

(a) Annual Report, Department of Municipal Affairs, 1913, pp. 64-65.


Population. Assessment. Total Taxes. Debt.

Irvine 540

Leduc 700

Lacombe 1,500

Macleod 3,000

Magrath 1,400

Morinville 500

Nanton 900

Okotoks 625

Olds 1,100

Pincher Creek 1,250

Ponoka 720

Raymond 1,700

Redcliff 2,500

St. Albert 1,050

Stettler 1,700

Stony Plain 510

Strathmore 600

Stavely 400

Taber 2,500

Tofield 800

Vegreville 1.700

Vermilion 1,217

Wainwright 1,000

$330,425 00

$10,200 00

$5,167 26

350,000 00

10,000 00

11,289 75

596.432 00

16,700 09

79,140 21

4,768,840 00

68,172 20

558,717 27

132,647 00

8,638 15

33,613 43

247,000 00

4,940 00

335,070 00

9,046 89

22,475 66

194.535 00

11,173 92

17,329 94

284,696 00

8,540 88

8,400 00

516,220 00

16,509 04

86.916 30

302,874 00

6,663 20

15,735 45

893,010 00

21,058 28

58,090 57

2,962,709 00

59,254 00

253,600 00

536,880 00

8.049 68

45,039 86

1,020,025 00

36,869 98

44,733 40

124.936 00

6.000 00

217.998 00

10.137 50

21,000 00

160,020 00

6.088 10

1.400 00

1,258.485 00

35,237 58

115.273 85

1.172,925 00

22,882 09

80,118 28

1,723,357 00

220,103 89

1,723.357 00

41,947 12

56,712 14

795,855 00

21,489 99

67.270 00

Before 1912 most of these towns levied their taxes on lands, personal
property, and improvements. However, as early as 1897, under the govern-
ment of the North-West Territories, legislation was in force in this region
making it possible, upon the vote of two-thirds of the council or upon peti-
tion of one-half of the rate-payers, to exempt improvements from taxa-
tion.(l) Only a few towns took advantage of this permissive legislation.

Early in 1912 the provincial legislature passed a new Town Act. This
act required that all the towns in the province which operated under its pro-
visions should immediately rearrange their tax systems so as to exempt
entirely buildings and personal property from taxation. The law reads that
" all municipal and school taxes shall be levied equally upon all ratable land
in the town," (2) and that "land shall be assessed at its actual cash value,
as it would be appraised in payment of a just debt from a solvent debtor,
exclusive of the value of any buildings thereon or any other increase in value
thereof, caused by any other expenditure of labor or capital thereon." (3)
The rate was limited in the law to " twenty mills on the dollar, exclusive of
debenture rates, school rates, and local improvement rates." (4)

This law seems to have been passed without a full investigation as to
what effects might be expected from the sudden change involved. No sooner
had the towns been notified of the change in the law than difficulties began to
(appear. The experiences of these towns are presented in some detail in a
following section, (5) Some towns found that it would be absolutely im-

( 1 ) Stalker, Taxation of Land Values in Western Canada (Montreal, 1914) :
Ord., N. W. T., 1897, c. 70, s. 139.

(2) An Act Respecting Towns. Statutes of Alberta, 1911-1912, c. 2, s. 265,

(3) Ibid., s. 267.

(4) Ibid., s. 294.

(5) Cf. infra, p. 129 et seq.


possible for them to raise the necessary funds if they respected the legal limi-
tation on the tax rate, and so they disregarded it. Other towns levied rates
for special purposes which had no sanction in law. A considerable number
kept the tax rate within bounds by over-assessment of land values. In
the town of Stettler conditions were so acute, because of the large amount
of land within the town which was exempt from taxation on the ground that
it belonged to the Canadian Pacific Railway Company, that the legislature
passed a special act permitting the taxation of improvements and personal

The Union of Alberta Municipalities had endorsed the principle of rais-
ing revenue from the taxation of land values only, but according to the secre-
tary, Mr. George G. Kinnaird,(l) it was not expected that the Government
would make the tax imperative and immediately applicable. At the conven-
tion of the Union which was held in September, 1912, the embarrassment
that had been caused by the imposition of the new Town Act was a subject
of prime interest ; but the sentiment of the convention proved to be that it
would be wise not to retract the step that had been taken. (2) A motion
calling upon the Government to repeal the land tax section of the Town Act
was again introduced in the 1913 convention of the Union of Alberta
Municipalities, but little strength developed behind the proposal. It must
not be assumed, however, that this failure to pass adverse resolutions indi-
cates satisfaction on the part of the towns with the legislation. The influ-
ence of the Union is very great, and the political effects of the passage of
such a resolution might be extremely far-reaching.

The members of the Government of the province frankly admit that the
change was made too suddenly. Action taken by the legislature in 1913 in
amending the Town Act, is considered to be a concession that the legislation
of the year before was somewhat hasty and ill-advised. The relief took the
form of the passage of a section permitting the imposition of a supple-
mentary business tax in those towns which found themselves in dis-
tress. (3) In order to secure the permission to levy a business tax it was
necessary for two-thirds of the members of the council to petition the min-
ister of municipal affairs. He, if satisfied that it was impossible for the
towns to raise sufficient revenue from the land tax, was authorized to per-
mit the council to impose a business tax based on the rental value of busi-
ness premises during a period of not more than three years. The term
might be extended, however, if the minister deemed it necessary. The maxi-
mum rate of the tax was made twenty per cent, of the rental value of the
business premises.

Twelve towns petitioned for and secured permission to levy this busi-
ness tax.

(1) Canadian Municipal Journal, IX, p. 394 (October, 1913).

(2) Annual Report, Dept. Mun. Affairs, 1912, p. 6.

(3) Assented to March 25. 1913; The Town Act, 1913. Amendment to Chapter
8, an act amending Chapter 2 of the Statutes of Alberta, 1911-1912, entitled "An Act
Respecting Towns."


An amendment at the next session of the legislature made it possible
for the minister of municipal affairs to restrict further the privilege of levy-
ing business taxes. This amendment removed the limitation on the tax
rate of twenty mills which had applied in the towns. With no restrictions
on the tax rate in force, it is clear that very seldom would it be " impossible
for a town to raise sufficient revenue." The three-year term of the busi-
ness taxes which was authorized in' 1913 will expire in 1915, and it is ex-
pected that the last business tax will be levied in that year.

Among the amendments to the Town Act in 1913 was one(l) which
stated that if the value at which any land had been assessed appeared to be
more or less than the true value, the amount of assessment was nevertheless
not to be varied on appeal, if the value at which said land was assessed bore
a fair and just relation to the value at which other lands in the immediate
vicinity thereof were assessed. This section was so interpreted as to legal-
ize over-assessment of real estate. The possible injustice involved in such
a situation influenced the legislature in its session in October, 1914, to amend
this section by adding the following proviso : " that in no case shall an
obviously excessive assessment be maintained."

Another amendment to the Town Act, made in 1913, operated to the
distinct disadvantage of some of the towns. Section 294 was changed by
adding the following sentence : " 3. In the case of a town school district the
rate of taxation on unsubdivided farm lands, situated outside of the limits
of the town municipality, shall not exceed eight mills on the dollar." In a
number of cases where towns had committed themselves to an expenditure
of large sums for school purposes, this amounted to the imposition of a
much heavier tax on town lands than on country lands for the school facili-
ties which served both. (2)

At the present time, then, all of the forty-seven towns in the province,
except two, exempt improvements from taxation. The two exceptions are
the town of Stettler, to which special concessions were given as outlined
above, and the town of Cardston, which has a special charter. In twelve
towns a special business tax is temporarily being levied. In the other towns,
all taxes are levied upon land values. (3)

The Villages /^

A village, when incorporated, must have an area of 640 acres and
twenty-five occupied dwellings. Villages are not incorporated into towns
until the population has reached 700. At the present time there are 93
villages in the province. (4)

Prior to 1912 taxes in the villages were usually levied on a base com-
posed of land, buildings and personal property. If, however, two-thirds of
the rate-payers petitioned and the council of the village passed a resolution,

(1) Assented to March 25, 1913. '

(2) Annual Report, Dept. Mun. Affairs, 1913, p. 11.

(3) For a fuller discussion of the effects of the Town Act of 1912, cf. infra, p.
129 et seq.

(4) Annual Report, Dept. Mun. Affairs, 1913, p. 11.


it was possible to secure permission to raise the revenues from a tax on land
values only.(l) Before 1912 approximately one-third of the villages had
secured this permission.

An amendment to the Village Act was passed in 1912, similar to that
in the Town Act, making the land the sole basis for taxation. In 1913 the
Village Act was codified, but no changes of importance were made. The
law as it now stands prescribes that " all village taxes shall be levied equally
upon the rateable land in the village according to the assessed value of such
land." (2)

The standard of valuation for land is prescribed as follows : " Land
shall be assessed at its actual value, as it would be in payment of a just debt
from a solvent debtor, exclusive of the value of any buildings thereon, or
of any other increase in the value thereof, caused by any other expenditure
of labor or capital thereon." (3) A special act was passed exempting one vil-
lage, Lougheed, from the provisions of the law. This was done because of the
large amount of land in that village which was exempt from taxation, owing
to the fact that it was owned by railroads.

Over-assessment is made possible by the inclusion of a clause similar
to that in the Town Act of 1912.(4) Although the section of the Town
Act was modified by the legislature of 1914, no action was taken changing
this clause in the Village Act.

The Rural Municipalities

This type of local organization was authorized for the first time by
legislation passed in 1912.(5) It was provided that the province be divided
into districts eighteen miles square. The resident electors in each unit of
territory were given the option of establishing a rural municipality or a
local improvement district. By the end of 1913, 66 rural municipalities had
been established. (6) It was provided in the Act of 1912 that all taxes for
the purpose of supporting the government of the rural municipalities were
to be levied upon the land values. (7) The Act included a definition of land
value similar to that in the Village Act, (8) and contained also the usual clause
prescribing that assessments shall not be varied on appeal if lands are
assessed at the same amount as other lands in the immediate vicinity. All
66 rural municipalities carry on business on this basis, and general satis-
faction seems to be found with the plan. According to Mr. John Perrie,
the deputy minister of municipal afifairs, " There would be a storm if
any change were made."

(1) Stalker, op. cit. p. 28.

(2) An Act Respecting Villages, s. 81, c. 5; assented to March 25, 1913.

(3) Ibid., s. 83.

(4) Cf. supra, p. 81 ; ibid., s. 83, sub. 2.

(5) Statutes of Alberta, 1911-1912, c. 3.

(6) Annual Report, Dept. Mun. Affairs, 1913, p. 11.

(7) Rural Municipality Act, s. 249.

(8) Cf. supra.


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 8 of 31)