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Municipalities stick small business with unfair property tax burden

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Annual study finds average business rate almost two and a half times residential rate across Alberta

Calgary September 13, 2017 –The Canadian Federation of Independent Business (CFIB) today released its annual Property Tax Gap Report, which analyzes residential and commercial property tax rates levied by Alberta’s municipalities over the past decade (2007-2016, the most recent year data is available province-wide). The report includes specific information for each of the province’s 87 largest municipalities.  

The research shows commercial property owners pay, on average, almost two and a half times more than a residential owner pays, based on the same assessed value of property. These findings come as Municipal Affairs Minister Shaye Anderson evaluates draft Municipal Government Act (MGA) regulations.

“Entrepreneurs are fed up with high property taxes. Shifting taxes onto business owners to cover excessive municipal spending is unacceptable.” says Amber Ruddy, Director of Provincial Affairs, Alberta.

The property “tax gap” is the differential between commercial and residential property tax mill rates. Overall the tax gap Alberta-wide in 2016 held steady at 2.45. The report pays close attention to Alberta’s 18 cities. Calgary and Edmonton have the most work to do with gaps of 3.81 and 2.75 respectively. While Calgary has a bigger gap, Edmonton taxpayers pay substantially more on the same assessed value, due to higher overall mill rates.

“As candidates gear up for the municipal election, entrepreneurs will be looking at policy platforms to see where their local representatives stand on issues of fundamental property tax fairness. Those running for council should get on the record and let local small business owners know their intentions for addressing commercial versus residential tax mix,” said Ruddy.

Figure 1:

 

graph
 *Denotes addition of business tax. Municipal taxes based on $100,000 of assessed value.

To ensure the property tax system is fair and balanced, over time CFIB recommends:

  • Municipalities reduce the tax gap through restraint in municipal operating spending. Cost savings should include: limiting the scope of government to core services, aligning public sector wages salaries and benefits to their private sector equivalents, and contracting out services where appropriate. Year-over-year operating spending growth should be limited to no more than inflation and population growth.
  • The province continue to reject proposals calling for increased taxation or revenue generating powers for municipalities, including through city charter arrangements.
  • The province and/or municipalities cap commercial-to-residential rates at a maximum of 2:1. The newly adopted 5:1 ratio does not fundamentally address the issue of fairness.

The full report containing data from all municipalities is available.

To arrange an interview with Amber Ruddy, Director of Provincial Affairs, Alberta, please call 1-866-444-8290 or email [email protected].

CFIB is Canada’s largest association of small and medium-sized businesses with 109,000 members across every sector and region, including 10,000 in Alberta.