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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.”

More information needed before shifting burden from business to homeowners, council says

Scott Dippel · CBC News · Posted: Apr 01, 2019 9:31 PM MT

Councillors are debating moving the tax burden off downtown businesses and onto residential properties. However, they’ve put off the decision in order to gather more information.

Sometimes it seems the best decision on a tough problem is to delay a decision.

Calgary City Council gathered on Monday to figure out how to head off large property tax hikes for business property owners outside of downtown.

It had eight different options on the table.  

And after hours of debate, council voted to wait one more week before deciding which of two scenarios it will use to set 2019’s tax rates.

$250M problem

The city has a $250 million problem it’s trying to solve.

That’s how much less tax money it will take in from downtown property owners as their assessments decline. That load will land on business property owners outside the core.

However, council is looking at options for shifting some of that load onto the half-a-million residential property owners.

Under a new scenario presented by Mayor Naheed Nenshi on Monday, the owner of a median-priced house assessed at $485,000 could end up paying about $120 more in 2019 than last year.

That’s a tax hike of 3.45 per cent.

There could be a bigger tax increase under another scenario.

Another option

Coun. Jyoti Gondek suggested transferring more of the tax burden to homeowners so that residential and non-residential accounts each pay half of the city’s tax requirements.

Where things get complicated is in deciding who the city chooses to help as the tax burden shifts.

Under Nenshi’s proposal, a $70-million grant program will be developed for this year and next year to help businesses still facing large tax increases.

“My point is,” he said, “I’ve got $35 million a year and can we use that $35 million a year to funnel larger grants to people who really need them, rather than spread it across many, many people. That’s my goal.”

Mayor Naheed Nenshi and city councillors have delayed making a decision on property taxes until next week.(Dave Will/CBC)

Under Gondek’s plan, the city would reach into savings to give homeowners rebates to ease their adjustment to higher tax levels.

In each of the past two years, the city spent almost $30 million per year to give business property owners a rebate to limit tax increases to no more than five per cent.

Nenshi makes no apologies for council’s decision to delay finalizing this year’s tax rate.

“Look, this is a tough decision, and we’ve kicked it from meeting to meeting to meeting already. Hey, what’s one more week?” the mayor said.

Absolutely not, says council

A proposal from Coun. Evan Woolley to cut this year’s budget by $100 million was roundly rejected by council.

Woolley said afterwards that without reducing the tax requisition, it’s that much tougher to resolve this problem without affecting business property owners.

“The business community will continue to bear the significant burden of that downtown shift and I don’t think that that’s fair,” Woolley said.

“We are unwilling to take a deeper look at our own budgets and move those efficiencies up.”

Mailing time nears

He also expressed disappointment that on the day council was supposed to make a decision and set tax rates, it didn’t. 

“We’re unwilling to make a decision. We’ve punted this for another week,” he said. “We have to get our tax bills out the door.”

The city does need some lead time to print tax bills once it sets the mill rates for the year. 

Normally tax bills are mailed out in May with the deadline to pay the taxes owing by the end of June.

Council did decide to delay until later this year on making any changes to tax rates for 2020, 2021 and 2022.

Province balks at condo Airbnb tax proposed by Victoria council

Bill Cleverley / Times Colonist

MARCH 6, 2019 06:00 AM

The province’s new speculation and vacancy tax declaration could provide a pathway to taxing condos being used as Airbnbs as commercial operations, says Victoria Coun. Geoff Young.

But it doesn’t appear the province is prepared to go down that road.

Frustrated at the prospect of hundreds of city condos being assessed as residential units even though they are rented out as de facto hotels rooms through online platforms such as Airbnb, the city wrote to the province to ask for a change through the B.C. Assessment Authority.

If approved, such an assessment change would triple the property taxes on those units.

But in response to Victoria’s request, Housing Minister Selina Robinson said the issue of short-term rentals is “complex” and amending the Assessment Act “would have substantial assessment policy, legislative and tax implications.”

“In addition, implementing such a proposal would be very costly and it would be time-consuming for B.C. Assessment to identify the units to which this policy would apply,” Robinson said in a letter to Victoria Mayor Lisa Helps.

Young, who had pushed for the property-assessment change, said he doesn’t agree.

“I think [Robinson’s response] probably reflects the position of the Assessment Authority.”

Although the change would require some additional effort, that would be small compared with the benefits, Young said — including the possibility that some units currently used as vacation rentals would return to the long-term-rental market.

Most homeowners in areas affected by B.C.’s speculation and vacancy tax will have received a letter from the provincial government advising how to make a declaration by March 31 to avoid being hit by the tax.

Young said it would be a small step to ask through that declaration process whether a property is being used as a short-term vacation rental.

“For them to say that it’s too much trouble to take the additional step for determining that if the property is used as short-term vacation rental it appropriately pays the same tax as a hotel, seems to be an inconsistent position,” Young said.

“It seems to me that once you’ve gone down this road of: ‘We want to know how you use your property and whether you’re living in it,’ you might as well follow that logic and ask your assessment authority to take whatever steps are necessary to ensure that they know how a property is being used.”

Young said the city permits situations where one or two bedrooms in an owner’s principal residence are used as short-term rentals.

“Also, we’re not fanatics. If you go away for six weeks in the summer from your permanent residence and you’re travelling, we don’t want to say you can’t rent out your house. So we would always allow some use of residential property,” he said.

Under the provincial tax, owners with non-primary residences who keep those homes empty more than six months of the year are subject to the tax, equal to 0.5 per cent of the assessed value, per year. Overseas owners who are liable for the tax will be charged two per cent of the assessed value. There are many exemptions, including one for properties occupied by renters.