Business disputes low-tax report
‘It’s a pretty expensive place to do business’
Local business leaders poked holes in a report Friday that found Calgary to have the lowest commercial property taxes among major Canadian cities.
The Real Property Association of Canada said the estimated Calgary tax in 2014 per $1,000 assessment is $14.11, well below the Canadian average of $24.25. Edmonton was fourth lowest of the 11 centres surveyed at $18.
The report also states Calgary’s estimated residential property tax in 2014 per $1,000 assessment is second lowest at $6.10. Vancouver was rated lowest at $3.68, while Regina was the highest at $13.69. The Canadian average is $9.51.
However, critics said the findings overlook other cost factors facing city businesses.
Justin Smith, director of policy, research and government relations with the Calgary Chamber of Commerce, said the report doesn’t consider that Calgary businesses also pay a business tax.
“Typically when we evaluate what the overall tax burden is for Calgary businesses we include both the non-residential property tax and the business tax,” said Smith.
“So Calgary is a bit unique in the sense that we have two forms of taxation. That’s something that city council decided a couple of years ago to phase out. But that phase out won’t happen until 2019.
Smith said Calgary business owners also face high costs for parking, real estate and labour.
“So overall when it comes to business inputs, it’s a pretty expensive place to do business. We shouldn’t take our eye off the ball looking for solutions to make things a little better for business,” he said.
Richard Truscott, Alberta director with the Canadian Federation of Independent Business, challenged the report’s methodology, which he said fails to include the city’s extra business tax.
“Our research shows commercial property pays three and a half times more than residential property, and more than four times once the business tax is included in the calcula- tion, as it should be,” he said.
“Looking at taxes rates as a percentage of assessment is a bit misleading, since commercial property values in Calgary are among the highest in Canada, which results in a lower per $1,000 of value figure.
“The real issue is the equity in shouldering the property tax burden between residential and commercial, not the tax rate compared to property value.”
Susan Thompson, business development manager for real estate with Calgary Economic Development, said the report doesn’t compare assessed values.
“So something that’s assessed at $100,000 in Saskatoon could be $200,000 or $300,000 here in Calgary. So this really isn’t an apples to apples comparison,” she said.
The report found Toronto, Van- couver, and Montreal had the highest commercial to residential tax ratios, all over 4:1 while the average commercial to residential tax ratio for all 11 urban centres was 2.79.
Calgary and Edmonton were at the low end of the scale with ratios of 2.31 and 2.25 respectively.
The Real Property Association report said commercial property taxes in Calgary have dropped by 1.3 per cent from 2013 while residential taxes have declined by 3.5 per cent.
“Excessive property taxes on commercial and industrial properties will make Canadian cities less competitive, and ultimately reduce the property assessment base and jobs,” said Michael Brooks, REAL-pac’s chief executive.