Property Taxation
Property assessments are used to determine how much tax a property owner will pay. This chapter examines taxation as a source of revenue for a municipality. Topics include:
• Municipal property tax
• Provincial education property tax
• The importance of the equalized assessment
• Other property related taxes used in Alberta
Municipal Property Taxation
Under the Municipal Government Act, municipalities are responsible for collecting taxes for municipal and educational purposes. Property taxes are levied based on the value of the property as determined from the property assessment process. Property taxes are not a fee for service, but a way of distributing the cost for the local government services and programs fairly throughout a municipality.
The property tax system is comprised of two distinct processes—preparing the assessments, and setting the tax rate. The assessor's job is to prepare assessments. The municipal council is responsible for completing the second process, setting the tax rate. In addition to setting the tax rate, the municipal council is responsible for calculating the taxes payable and collecting the taxes.
Education Property Taxes
In Alberta, education is a provincial program. The taxes that fund the program are raised and distributed on a provincial basis. Education property tax dollars are pooled in the Alberta School Foundation Fund and then allocated among school boards throughout the province.
This system of pooling taxes from all municipalities ensures that funds are available to provide all students with a standard level of education, no matter where they live.
Each year the province calculates the amount that every Alberta municipality must contribute towards the public education system. The calculation is based on a formula that takes into account the equalized assessment in each municipality and the provincial uniform education property tax rate.
The province notifies municipalities of the amount of education taxes they are required to collect. Each municipality then establishes a local education property tax rate. This tax rate is calculated by dividing the required amount by the municipality's current taxable assessment.
The municipality then applies its local education tax rate to the assessed value of each property to determine the amount of education taxes each property owner is required to pay for the year. Municipalities include the education property tax on their annual property tax bills to property owners. Municipalities collect education tax dollars from their ratepayers, and send them to the province or to a separate school board.