City needs to consider holding line on taxes
Local business owner Rob Pangrass is fed up with what’s come to be known as the Edmonton Disadvantage, ever increasing taxes and red tape for businesses that are already struggling through an iffy economy.
Business owners and organizations have now banded together into a coalition called Prosperity Edmonton to lobby city council and explain what business owners like Pangrass are facing.
Pangrass has co-owned Western Body Truck Manufacturing since 1993. When the oil economy was booming a few years ago, Pangrass employed 85 workers. With the downturn in oil prices, however, at one point he had to cut to his staff to 28.
“It was brutal,” Pangrass says. “So we cut wages by 10 per cent, we cut everything, and in the middle of that we’re getting tax hikes. I’m just like, ‘Are you kidding me?’”
Two competitors went out of business. His company reduced its prices to win business and stay afloat, but the cost of renting a building went up because of rising property taxes.
There was a 124 per cent increase in business property taxes from 2006 to 2016, Prosperity Edmonton said.
“We’re making less money because of our prices and we’re making less money because the cost of renting a building is going up because of the taxes,” Pangrass says. “It’s kind of like a double whammy.”
New or increased federal and provincial taxes and regulations are also part of the issue, Pangrass says.
Pangrass is far from alone in his difficulties. The Prosperity Edmonton coalition — headed up by groups like the Edmonton Chamber of Commerce and the Urban Development Institute — has sent a letter to Mayor Don Iveson and city council warning that businesses are looking at cutting jobs or are going under because of increased taxes from every level of government.
With Edmonton’s rising population and steady inflation, it makes sense that the city would have to raise taxes and spend more on its operations, but just how much more is in question.
Edmonton’s population increased in the last decade, going to 933,546 people in 2016 from 730,372 people in 2006. That’s a 28 per cent increase.
There’s also been a rise in the cost of living of 23 per cent.
In 2006, the city spent $1.239 billion on operations but by 2016 that had increased to $2.52 billion.
So while consumer prices and population increased a combined 50.5 per cent, the city’s operational spending increased 103.4 per cent, Prosperity Edmonton says, and that’s unsustainable.
Business groups haven’t come together like this to lobby city council in decades, but Amber Ruddy, provincial director of the Canadian Federation of Independent Business, says it’s got to the point where such action is necessary.
“At the municipal level you have these eye-popping property tax bills that are coming out. Business owners are getting frustrated.
“They’ve had a very tough time getting through this economic downturn and at the very moment when you’d think the government would have their back, they feel abandoned.”
Ruddy wants city council to get away from pet projects and stick to its core mandate of providing services such as transportation, utilities, policing and fire fighting.
She wonders why, for example, the city is focusing on becoming a global leader in climate strategy. “Is that something the municipal government should be focused on? ... What I’m hearing from business owners is that that’s not the most pressing priority that they’re facing right now. Businesses are thinking, ‘Am I going to stay open? Is this the best place for me to do business?’ And increasingly Edmonton is not becoming the top choice in the region.”
In response to Prosperity Edmonton, Iveson notes the city is already undertaking a program service review to look at all city costs.
An inflationary environment in terms of the costs of goods and salaries contributed to the need for tax increases, Iveson says. “The good news now is I think we’re going into a lower inflationary environment with labour and a little bit more competitive pricing for infrastructure.”
The provincial and federal governments are also now stepping up to better fund major infrastructure like LRT, Iveson says. “Structurally I think we’re going to end up with lower tax increases than what we’ve seen in the last few years.”
I’m not sure lower tax increases are enough. It’s time for a few years of zero tax increases.
This current city council doesn’t strike me as being packed with budget hawks, but that can change.
It was public pressure that pushed council to freeze property taxes for years in the 1990s.
It will only be public pressure that can do the same now.