Lethbridge County’s controversial ‘head tax’ will be staying put after a judge ruled the tax is legal.
“We’re happy that the judge upheld the business tax,” said Lethbridge County Reeve Lorne Hickey. “He felt that under the Municipal Government Act, we were fully capable of putting that tax in place.”
The $3-per-head business tax — more commonly referred to as a ‘head tax’ — was imposed on area feedlot operators in April 2016 as an effort to raise $3.5 million annually over 35 years to cover road and bridge maintenance. The tax has been dropped to $2.50 per head for 2017.
On April 20, a Court of Queen’s Bench judge ruled that “the Business Tax Bylaw complies with the delegated taxation powers” laid out in the Municipal Government Act. That was good news for the county — but not for feedlot owners who feel the tax is unfair.
“When you challenge the intensive livestock industry the way the county has, and other governments have, we’re really concerned for our longevity in this business,” Rick Paskal said in an interview last fall.
Paskal, who is president of Van Raay Paskal Farms Ltd., which owns seven feedlots in southern Alberta with capacity for up to 130,000 head, was one of nine feedlot operators who initiated the lawsuit against the county. Paskal declined to comment for this article.
Cattle feeders in Lethbridge County currently feed around 500,000 head of cattle, more than half of the cattle on feed in Alberta and Saskatchewan, but the $3-per-head tax — along with increased costs because of the carbon tax and new workplace safety legislation — has made it harder for them to compete.
“Right now, it’s $5.60 more costly to feed cattle here in Canada than the United States. The $3 tax takes us to $8.60,” Paskal said last fall.
“They have found their cash cow, so to speak.”
But for the county, it made sense to gear the tax to the biggest users of the rural road infrastructure, said Hickey.
“We’re not out to make a hardship for anybody, but we’re responsible to keep up our roads to a certain standard,” he said.
“We tried to go after the people who had the highest use of the infrastructure.”
Lethbridge County has “very little” oil and gas activity, so the tax base is smaller than it might be in other counties, said Hickey.
“Other counties are able to keep up their roads better than we’ve been able to because we don’t have that extra income.”
The head tax was designed to pay for a new “market access network,” a series of “better-quality” haul roads that link to numbered highways. The primary users of these roads are intensive agricultural operations, he said.
“We had a lot of trouble with our infrastructure, especially during heavy rain periods or frosts,” said Hickey. “But with the improvements to the roads we’ve been making, that should eliminate that.”
The county also levied a special tax on all farmland in the county, which the judge ruled was not “specific” enough to comply with the Municipal Government Act and was therefore invalid. The county may implement a “modest increase” to the mill rate instead.
While it’s uncertain whether the feedlot operators will appeal the ruling, Lethbridge County is open to further meetings with them to discuss their concerns, said Hickey.
“We’ve always said our door was open, and we meant that.”