Discounts for early payment of City property taxes will be eliminated starting in 2013.
Both the school divisions and the City shared in discounts offered to taxpayers as an incentive to pay their taxes early. Commencing in January 2013, the school divisions will no longer share in the cost of providing discounts, explained Lonnie Kaal, Director Finance with the City.
At present City taxes are due Aug. 31, each year, with one-third paid in January, a third in August, and the rest spread over the other months, said Kaal.
Kaal said discounts are usually based on the cost of borrowing, since they were put in place to encourage earlier payment supplementing the cash flow and reducing borrowing requirements.
That would mean a reduction of 1.45 per cent at present, but since, school taxes are 31 per cent of the total amount collected, and they no longer offer a discount then this rate should be reduced by 31 per cent, said Kaal. That would reduce the discount to only one per cent.
There is really no benefit in getting cash in earlier as the discount costs would typically be very close to what interest borrowing costs would be. The only difference is that the City is paying this to the taxpayers instead of the bank, said Kaal.
"Given that the school divisions are no longer offering discounts for early payment, it is reasonable for the City to stop offering discounts for early payment as well," she added.
The date for tax payment was also adjusted for 2013. Kaal said as it stands eight of Saskatchewan's cities already have June 30 as a deadline. The rationale for June 30, is that the City provides services for six months without payment, and then the property pays for the six months service in advance.
The penalties for late payment of property taxes will also be adjusted for 2013. The penalties will be reduced to 0.5 per cent per month, or six per cent a year, down from the 0.75 per cent per month now paid on four months.
