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Back  |  January 23, 2017  | 


Vice-Chair Blog - Non-Residential Tax Announcement

As a previous entrepreneur and senior manager in various corporations, I can certainly appreciate the struggles businesses have been experiencing the past few years. With the existing tax assessment system (directly through the Municipal Government Act – Provincial), an anomaly has occurred due to the significant decrease of assessment values in the downtown core ($6B). This in turn pushed extreme increases onto businesses outside the core, some +30% or more.

In the current economic environment, this scenario is untenable. I voted early this year against previous recommendations to assist businesses because I analyzed them and they would not have achieved the desired outcome. I can now support this initiative, as it’s effective, pragmatic and the base has increased significantly. Will this save all the businesses ? No. It is not a silver bullet; however it will have a positive impact overall. It is unfortunate the other levels of government have introduced policies that have hurt business, rather than helped. Moreover, this program will be nullified if the Province does not match our zero tax increase on their portion of the property tax.

This $45M non-residential tax-phased assistance will reach all businesses throughout Calgary equally, and will result in a maximum tax increase of 5% (municipal part of tax bill). This addresses over 6000 properties, which in turn helps over 9000 businesses. The question was asked – “Why not commit to two years ?” My answer is - We are not sure of the position the City of Calgary will be in, in terms of budget and revenue. Additionally, we do not know the assessment outcome. The new Council will know this information and can decide according.

The money for this program is coming from the savings/surplus of 2016 ($30M) and the previously committed $15M (in November) put aside from the FSR (rainy day fund).

As a reminder, Council has committed a total of $228M from the FSR (rainy day fund) over the 2016 and 2017 budget. More than half of this money has been committed to residents (non-residential tax is much higher than residential).

After all the Council-voted commitments ($228M), the current balance of the FSR is now $277M (8%). The FSR target from Council is (5% to max 15%). Continuing to commit to the current Council decisions in the near future is not sustainable. We are going to have to look at our financial position differently in the near future.

The existing Council will decide the initial indicative tax rate for 2018. The newly elected Council will have to decide the parameters for the upcoming 4 year wage contract and the final tax rate for 2018. 

Another question posed was – “This is an election year, is this why you are doing it ?” My response is - we did not chose the current economic environment, and we are fortunate that by managing the budget the opportunity to help residents and businesses of Calgary exists. You will know from my previous VC blogs that I have always been pragmatic, and I approach all items from a logical and business perspective.

My commitment and position has been consistent for almost 4 years now; we need to focus on permanent operating budget-targeted reductions. This will address the overall tax burden for all Calgarians.

Ward Sutherland ​

Categories: Budget; City Finances; City Finances Blog

This content represents the personal views and opinions of the Ward Councillor and should not be taken as a statement of policy of The City of Calgary. The inclusion of any external content does not imply endorsement by The City of Calgary.​