As much as Calgary business is focused on the dynamics of moving forward from the various COVID disruptions and the roller coaster of the Calgary economy, even the most polsitive and gung-ho Calgary business types are starting to wonder about the relevance of the cliche, “can’t win for trying.”
Now that Calgary Council has approved 2022 budget changes (individual property assessments won’t be finalized until January and tax bills mailed out in the spring), there’s much concern that some Calgary businesses could see the heavy hit of property tax hikes of more than 10.37 per cent.
The explanation, and most of the blame, for the downtown tax hikes are about spending increases at City Hall, the continued pressure of high downtown vacancy rates aggravating the squeeze on municipal finances, and the advanced math of Calgary’s protracted tax shift problem.
The tax shift refers to the Calgary reality that, under the city’s assessment system, high downtown office vacancy rates combined with Calgary’s depressed property values have caused a redistribution of the tax burden on to commercial properties outside the downtown core.
The hardest hit properties are expected to be retailers in neighbourhood shopping centres, which could see a more than seven per cent hike in taxes directly attributable to the tax shift. There is also concern about large-format industrial warehouses getting hit with a more than nine per cent tax hike and maybe getting driven out of town, to tax-friendlier business jurisdictions such as Rocky View County.
“Over the last several years, non-residential properties in Calgary have seen the largest tax hikes relative to other major cities in Canada,” notes Deborah Yedlin, president and CEO of the Calgary Chamber. “Despite early signals of a moderate increase to property taxes, the approved 2022 property tax rate will result in double digit increases for some Calgary businesses.”
The Calgary Chamber has consistently urged Council to rebalance property tax ratios to foster fairness and competitiveness in Calgary’s property tax system. “With the tax split and ratio remaining relatively consistent, the burden placed on businesses to fund critical investments reinforces the need to ensure that Calgary can effectively raise revenue through alternative means,” she adds. “This could include the sale or lease of City-owned property or the issuance of municipal bonds.”
With certainty and stability as key factors for ensuring a sustainable economic recovery, The Chamber urges that Council turn its attention to creating a property tax system that is predictable and transparent. “The higher taxes, coming at a time of inflationary pressures, will put additional pressure on Calgary businesses,” Yedlin says, “as they seek to move beyond the challenges presented by the pandemic and, given ongoing issues with downtown vacancy.”
There’s business consensus about the need for the City to be innovative and identify additional options to diversify revenue streams, while also addressing the property tax issues, in order to ensure Calgary is positioned to attract new businesses.
Yedlin emphasizes that, as Calgary enters the next four-year budget cycle, Council must establish a direction that supports economic recovery and fiscal responsibility, while also investing in the future of the City.