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WHEREAS municipalities are given broad responsibilities under the Municipal Government Act to provide infrastructure and other services for their residents; AND WHEREAS a principal source of municipal revenue comes from municipal assessment and taxation;AND WHEREAS it is desirable for municipalities to be able to maximize revenues from the municipal tax base to adequately provide essential infrastructure and services; AND WHEREAS Section 297(1)(d) of the Municipal Government Act provides for machinery and equipment to be treated as a separate assessment class; AND WHEREAS Section 9(3) of Matters Relating To Assessment And Taxation Regulation A.R. 220/2004 requires that assessments for machinery and equipment not forming part of linear property reflect only 77 per cent of value; AND WHEREAS the assessment of linear property and other assessable property is not discounted to 77 per cent of value; AND WHEREAS under the Machinery & Equipment Assessment Minister’s Guidelines the assessed value of machinery and equipment is subject to an immediate 25 per cent depreciation factor further diminishing the assessed value of machinery and equipment; AND WHEREAS many Provinces and Territories of Canada do not give special treatment to assessment of machinery and equipment;AND WHEREAS the principle of fairness and equity in assessments supports assessment of machinery and equipment at full fair market value;
THEREFORE BE IT RESOLVED that the Alberta Association of Municipal Districts & Counties requests the Government of Alberta and the Lieutenant Governor in Council to abolish subsection 9(3) of Matters Relating To Assessment And Taxation Regulation, A.R. 220/2004.
Local Government Authorities throughout the Province of Alberta are committed to the principle of fair and equitable assessment and taxes for its rate payers.In striving to uphold that principle, municipal governments are faced with inequities that are inherent in the assessment methodology that is regulated through provincial enactments and regulations, for valuation of the different property assessment classes. Of specific concern are the inequities that exist in the assessment methodology as it pertains to the machinery and equipment property assessment class compared to the non-residential and residential property assessment classes.Currently, the assessment of machinery and equipment is regulated under the Alberta Government Regulation 220/2005 (Matters Relating to Assessment and Taxation) to be assessed at 77 per cent of its value. This automatic reduction is arbitrary and bears no relation to economic depreciation or economic worth. On the other hand, non-residential and residential assessment classes are assessed at 100 per cent of market value. Although different tax rates may be applied against the non-residential assessment class, of which machinery and equipment is a component, it is not taxed at its full value. This difference in methodology creates an inequitable and unfair tax distribution amongst the various property classes.Under the Machinery and Equipment Assessment Minister’s Guidelines, the assessed value of machinery and equipment is already subject to an immediate 25 per cent depreciation factor which further diminishes the assessed value at which machinery and equipment is taxed in comparison to the other property assessment classes.
Resolution 14-05S requests that the provincial government either amend the MGA to allow for the non-residential assessment class to be sub-divided into industrial and commercial classes to provide for a split tax rate, or that machinery and equipment be assessed at 100 per cent value rather than 77 per cent.Resolution 24-03F requests that the provincial government review procedures applied to linear and M & E properties in order to cease assessment and tax shifts away from the regulated assessment properties towards market value properties.Resolution 25-02F urges the provincial government to amend the MGA to provide municipalities with the legislative authority to create a sub-class under the non-residential class of assessment for linear property and to allow a municipality to set different tax rates for the non-residential, linear and Machinery & Equipment assessment classes. The provincial government has most recently replied that they are not considering significant changes to overall property tax policy at this time, but is working with stakeholders to review and update regulated non-residential assessment rates and schedules.
A review to address this concern is not expected to take place until a major review of the Municipal Government Act is undertaken. In the meantime, Municipal Affairs and Housing is committed to working with both municipal and industry stakeholders to develop solutions that will address the concerns of all parties within the existing legislative framework.