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Back  |  May 31, 2019  | 

Council has spent many hours in recent months discussing the non-residential property tax shift and on Monday, ultimately chose not to pursue a grant program to provide relief for small businesses. However, we’ve come together to fix it.

For context, for the last three years, assessment values in downtown Calgary have dropped off a cliff. Many downtown businesses have seen huge tax decreases, while those outside the core have seen enormous increases. This isn’t fair but we’re at the mercy of the market and of our property tax system, mandated by the province.

This is a redistribution problem; it’s not because city taxes or spending are out of control. Our taxes remain amongst the lowest in Canada for both homeowners and businesses. We’ve maintained this by capturing over $600 million in savings in the last four-year budget cycle. Nonetheless, that’s cold comfort to businesses seeing giant increases in their monthly tax bill.

Since 2017, council has been using our savings to protect small businesses from this redistribution problem. We’ve allocated over $90 million to cap their increases at five per cent for both 2017 and 2018. We didn’t have enough cash on hand to do exactly the same thing this year, and there was some criticism of the effectiveness of the program.

So, council agreed to set aside $70.9 million and started looking for better solutions. There were debates over many options.

The mayor presented a compromise scenario to use budget savings to reduce non-residential property taxes by about two per cent this year and then freeze them for the next three years, getting us to a 50/50 split between residential and non-residential taxes in 2022 (it was 45/55 and everyone agreed that’s out of balance). It also used the $70.9 million for an idea presented by business owners: a cash grant to help small businesses improve their revenues.

Council accepted part of this proposal: they kept the residential tax increase at 3.45 per cent for 2019 while decreasing the non-residential by about three per cent overall and asked administration to design a grant program.

When administration came back, the small business resilience grant wasn’t perfect, but it would have put up to $4,000 directly into the pockets of small businesses.

Council said no — the program was seen as bureaucratic and confusing — although no other options were on the table. This left us with $70.9 million set aside, but no way to spend it.

Council understood this was untenable and came together to find a better solution. It, too, is not perfect, but it puts money into the hands of businesses immediately, something we fully endorse.

We all need to come together to fix this, including the provincial government. Something missing from this conversation is nearly 40 per cent of property taxes go to the province.

In the motion proposed by 14 members of council, we committed to finding another $60 million in savings in 2019 and beyond, and we ask the provincial government to match those funds to put directly towards non-residential properties and work with us to resolve this issue.

Unfortunately, the new minister of municipal affairs responded Thursday by saying the city has “hiked operational spending far beyond inflation and population over the last decade” and council needs to stop passing the spending hikes onto businesses. This is simply not true.

The combined population and inflation increase for the last four years is 7.59 per cent. The increase in the city’s tax-supported operating expenditures of 5.89 per cent, mostly uncontrollable inflation.

And the combined tax rate for non-residential properties this year went down by three per cent. Again — we know this goes over like a lead balloon because businesses don’t see this reflected in their bills. We’ll continue to reduce the cost of our government prudently while maintaining essential services, but we need a provincial partner who understands the issues and is willing to help.

We know our new provincial government shares the same goal of helping businesses and can be a strong partner in solving this. This may be the time to talk about meaningful tax reform in Alberta.

Your city council is never going to stop fighting for small business.​

Categories: Better economy; Budget

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