It’s no secret businesses in Calgary are struggling. Both employers and employees have been dealt a series of tough hands.
A full 7,214 businesses closed their doors in Calgary in 2016. The good news is Calgary’s entrepreneurial spirit lives on as 7,376 new business licences were issued in the city, showing Calgarians might be taking advantage of recession-spurred available labour and reduced costs to attempt to make a go at something new.
Still, the unemployment rate in Calgary hovers above 10 per cent, and 9.8 million square feet of office space sits empty in downtown Calgary, according to Western Investor.
The decline of downtown businesses meant a significant shifted burden onto suburban businesses, which the mayor indicated will see “kind of shocking tax increases.”
Though the city’s residential property tax freeze was welcomed by residents – many of whom saw property tax increases anyway – businesses were still left struggling. Luckily for residential and business property taxpayers alike, it’s an election year!
In late January, the City of Calgary approved a tax rebate plan to cap non-residential property tax rate increases (for businesses) at five per cent.
When the city approved the program, Calgary Mayor Naheed Nenshi declared Calgary is “open for business!”
The one-time-only program cost $45 million which was taken from the city’s fiscal reserves. At this point, those reserves are being drawn down quite a bit, but arguably, the city was stashing away too much in savings, thanks to overly high property taxes over the course of several years.
The tax rebate is unquestionably a welcome measure. But the rebate is temporary – a one-time solution that will aid businesses this year only – and it still amounts to a five per cent increase at a time when many businesses are struggling just to stay afloat.
The irony of it all is that while Mayor Nenshi declares Calgary “open for business” with this one-time rebate, he is at the same time continuing to ask the provincial government for increased tax powers that could make Calgary a more expensive place to do business.
As finance minister, Joe Ceci has overseen the imposition of the province’s multibillion-dollar carbon tax, a 20 per cent business tax hike, an income tax hike, a train fuel tax hike and beer tax hikes. Now he has taken over the city charters file for the provincial government. It would be unsurprising to find business owners shaking in their boots.
Nothing screams “open for business” like new taxes, right?
The city’s business rebate was good, but it didn’t address the problem: city spending. According to the Canadian Federation of Independent Business, the City of Calgary increased real operating spending by 66 per cent over 10 years, while population growth only increased by 28 per cent.
Through these tough times, the city has found some “efficiencies” such as mowing low-use play fields a little less and slightly reducing the growth in Calgary Transit hours, but businesses have been forced to make actual tough decisions to lay off employees or reduce pay and hours to stay afloat – while their taxes have increased.
It’s time for the mayor to rub the dollar signs from his eyes and halt his ask for new tax powers. Instead, city council should get with reality and offer long-term tax relief by making meaningful spending reductions. Then they can say with confidence that Calgary truly is open for business.
Paige MacPherson is Alberta director of the Canadian Taxpayers Federation.