Saskatchewan municipalities that withhold taxes they collect on behalf of school boards won’t receive grants they are due from the provincial government under legislative amendments introduced last week.
Government relations minister Harry Van Mulligen said the law requiring one level of government to collect taxes for another was introduced decades ago and had to be clarified. School boards had asked the government to do that, he said.
Several times within the last 10 years rural municipalities either threatened to or withheld education tax as a way to call for property tax relief.
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Van Mulligen said that won’t happen after the amendments are passed.
Municipalities will have to provide monthly reports to school boards indicating the amount of taxes collected to date. Interest charges can be applied to taxes not forwarded in a timely manner.
“It’s also clear that if municipalities insist on withholding those taxes, at the end of the day, government can withhold its grants to those municipalities,” Van Mulligen said.
The proposed amendments also clarify how discounts can be applied “to ensure that they’re not being applied in a perverse way to slow down the payment of taxes to school boards,” he said.
In 2004, some RMs extended discount periods and eliminated or reduced penalties for late payments in order to restrict the flow of money to school boards. The provincial government amendments call for a uniform discount and penalty rate for RMs, towns, villages and northern municipalities.
“School boards can always take legal action but we’re hoping that with this legislation, there won’t be a need for that,” the minister said.
The amendments also apply to the Municipal Hail Insurance Act because municipalities collect those premiums and the same discounts and penalties apply.
Van Mulligen said school boards are supposed to spend their money on educating students. Some had to borrow funds to see them through the tax protests and had to pay interest on those loans.
He added that the issue of education tax on farmland seems to have died down, at least for now.
