Saturday, May 2, 2015

Taxation: Setting the Mill Rate

Step one was the assessment; figuring out how much the entire municipality is worth (the Overall or Total Assessment). 

Step two is building a budget to determine how much the municipality needs to operate for one year.

Step three is setting a mill rate.  Setting the mill rate is really very simple.  All you have to do, is divide what you need into the overall (or total) assessment.  The mill rate is the number of dollars the property owner must pay, per thousand dollars of his property's value, as declared on the assessment.  For example; if a home's assessed value is $200,000 and the mill rate is set at 6.5 mills, the homeowner must pay 200 X 6.5 = $1300 in property tax.

Oops, not so fast!  The provincial government shoves its hand in there, too!  The Ministry of Education tells each municipality how much it will take to pay for education services in the area.  They don't ask, they don't advise, they just tell and take!  Alberta Education simply dips into each municipality's bank account a couple of times a year, and snatches out tens of thousands of dollars each time. 

If a municipality is having difficulty collecting its taxes, this makes the operation of that municipality even harder!  The province takes those funds out - whether or not the municipality has been able to collect them!   If some taxpayers are unable (or unwilling) to pay their taxes, the municipality suffers because it still must make sure it has the money in bank to pay the TOTAL bill for the provincial education portion of the property tax -- even though some of those dollars haven't been collected yet!

When you receive your tax notice, check down to see how much of that is going to the province.  It will be listed there as a mill rate for education.  This is added onto the municipality's mill rate. 

No comments:

Post a Comment