Calgary Business Groups Propose PropTax Fix

Calgary business groups propose plan that would lessen their tax burden and make homeowners pay more

Helen Pike · CBC News · Posted: Apr 01, 2019 8:12 AM MT | Last Updated: April 1

Terry Wong with the Chinatown District BIA says there are many vacant storefronts in the area already. (Helen Pike/ CBC)51 comments

Business groups in Calgary are proposing major changes to the way property taxes are collected that would curb the massive increases many business owners have faced in recent years — while increasing the share homeowners must pay.

On Monday, city council is set to debate several scenarios as it considers how to get the city — and many businesses — out of a difficult spot.

Property values downtown have continued to falter, and that has shifted the non-residential tax burden to many businesses outside of the city’s core.

That means there are nearly 7,800 non-residential accounts facing tax hikes of more than 10 per cent.

Representatives of various business improvement areas (BIAs) say that would spell disaster for many commercial enterprises.

“It adds on top of their current burden, relative to the increase in the minimum wage, overtime costs, and so on and so forth,” said Terry Wong, with the Chinatown District BIA. “Having more taxes on them will result in businesses shutting down.”

Wong and other BIA directors have come up with a five-step plan they say will help shelter entrepreneurs from such large hikes.

“The things we’re advocating are definitely long-term fixes to a systemic problem,” he said.

Business groups have a five-step plan

Specifically, he says the BIAs propose that:

• The city reduces spending and finds more savings, as it has done in previous years.
• Create separate tax rates for different types of non-residential properties — such as offices, industrial properties and commercial retailers — as well as tax rates that vary by geographic location.
• Balance the tax burden between businesses and homeowners, so each group pays 50 per cent of the total.
• Introduce a tax rebate or phase-in billing for properties slated for an increase of 10 per cent or more.
• Advocate for changes to Alberta’s Municipal Government Act to allow cities to tap other revenue streams, including different forms of revenue based on consumption that would apply to people who are using city services from out of town.

Alison Karim-McSwiney, executive director with the International Avenue BIA, says one of the most important points they’re hoping council will look at is narrowing the gap between what businesses pay and what residents pay in taxes.

Businesses in Calgary have traditionally shouldered a larger share of the municipal tax bill. Last year, taxes on businesses accounted for roughly 55 per cent of the total, while homeowners picked up the other 45 per cent.

Meanwhile, the city has been using reserve funds to limit some of the largest tax hikes on businesses outside the city’s core, which Karim-McSwiney described as unsustainable.

“You can’t keep pulling from the fiscal stability reserve,” she said. “But the reality is that you’re going to have to keep doing that unless you actually look at what the systemic issues are.”

She says if councillors don’t change the tax structure, they will continue to run into these sorts of problems. 

And councillors recognize the difficulty for small businesses. They’ve had marathon meetings about the issue. 

Coun. Jyoti Gondek says she’s in favour shifting the tax burden between homeowners and businesses to an even 50-50 split — even though it’s not likely to be popular with voters. 

“We need to come up with a longer-term solution on how we’re going to do assessments into the future,” she said.

“No one wants to see their property taxes go up. But year over year, we have pummeled non-residential properties, and we’ve got businesses going under. I’m very concerned that people will be in positions of unemployment and unable to hang on to their homes.”