Business tax hit shifts to ’burbs
Amiddowntown exodus, steep hikes forecast outside the core
A city councillor is warning of significant property tax increases for suburban businesses, as the downtown vacancy rate reaches a high never before seen in Calgary.
The ongoing economic downturn has emptied office buildings in the core, pushed the downtown vacancy rate to 22.1 per cent and lowered market values downtown.
But taxes still need to be collected and even though a tax freeze is on the table for next year, Ward 10 Coun. Andre Chabot said business owners outside the core should brace for a “huge tax increase” to make up for lower property assessments downtown.
“Those people will have to pay a disproportionate share of that tax burden,” said Chabot.
“Those (businesses) that (are not assessed) below the average will be facing a significant increase.”
The potential property tax jump comes as local business owners are shutting their doors or moving at a record pace, and it follows hundreds of complaints from business owners to councillors in June, when property tax bills landed in mailboxes.
“I expect we’re going to get a lot of phone calls because it’s going to be a very significant transition from the inner-city taxes, where we collect a bulk of our tax revenue, to the outlying areas. They will be impacted fairly significantly,” Chabot said.
“I don’t know what the solution is. We’re going to have to see if we can provide something as a temporary relief. At the end of the day, we’ve got to pay our bills just like everyone else.”
Council is preparing to make changes to the 2017 budget next week and on Tuesday, Mayor Naheed Nenshi said he’s hopeful councillors will approve offsetting a 1.5 per cent increase with a one-time rebate to make a zero tax rate increase, a move endorsed by council in June.
But Nenshi acknowledged when it comes to non-residential properties, the city has seen “a huge shift in the assessment base” because downtown properties have lost value.
“To over-simplify, people in the downtown core will see a decrease, and people outside of the downtown core may see an increase,” he said.
“The average is frozen at zero, but individual businesses will likely not see zero unless they happen to be exactly average.”
In a speech last week, Nenshi hinted Calgary businesses should brace for “some shocks” with possible massive changes to nonresidential assessments, “whether you’re in a downtown business or an outside-of-downtown business.”
“Because of the way property tax is calculated, that’s going to mean some shifts and swings in property tax similar to what we saw in 2010,” Nenshi said during a luncheon hosted by Calgary Economic Development.
In 2010, the value of a typical home in Calgary dropped 13 per cent and non-residential properties plunged by 15 per cent, according to city assessors.
Amber Ruddy, Alberta director for the Canadian Federation of Independent Businesses, said it’s hugely concerning that suburban businesses could face big tax hikes.
“It’s putting businesses over the edge. The list of new taxes, regulations and pressures on businesses is getting longer and longer,” she said.
Ward 1 Coun. Ward Sutherland said while he doesn’t think the tax increase for businesses outside the core will be significant enough to spur closures, it’s yet another challenge for already challenged
The list of new taxes, regulations and pressures on businesses is getting longer and longer.
business owners.
“When you add it all together, is it going to hurt businesses? Of course it is,” he said.
Council will begin deliberating the 2017 budget on Monday at 9:30 a.m., a meeting the public is welcome to speak at, and Chabot said he expects to hear from many Calgarians.
“I think there’s a lot of people that would want to have their say in front of council and express their concerns, and I expect there will be a few, especially if they start looking at what their taxes are going to be year over year, primarily small businesses in the outlying areas,” he said.