Redistribution of tax burden could result in double-digit property tax hike

As city council ponders how to resolve a $280-million revenue gap left by eroding commercial property values, a scenario floated by administration to shift the burden to homeowners could result in property tax hikes well into the double digits.

Homeowners could see increases ranging from 9.35 per cent to 21.15 per cent in 2019, according to scenarios outlined in an internal memo circulated to council members and obtained by Postmedia Friday.

The hikes for homeowners would correspond with tax decreases for non-residential properties, which have long shouldered the lion’s share of Calgary’s municipal tax burden.

But even a modest redistribution to residential properties would see the typical household’s taxes increase by $175 in 2019.

And at the extreme end, if the city were to shift $150 million in tax burden to residential proper- ties, the typical Calgary household would pay $396 more in taxes in 2019.

Mayor Naheed Nenshi told Postmedia he doesn’t expect council will be in favour of shifting a big chunk of the tax burden onto homeowners all at once.

“I don’t think we can do all of this in one year. I don’t think that’s tenable,” Nenshi said.

Shrinking values downtown caused by the downturn have triggered a redistribution of the tax burden to other non-residential property owners outside the core over the last two years.

Until now, small businesses have borne the brunt of the tax-shift pain — though the city has spent nearly $90 million in an attempt to keep tax increases limited to five per cent.

But last week, in releasing the proposed budget for the next four years, city officials hinted they might only be capable of capping tax hikes at 25 per cent for nonresidential properties in 2019.

Calgary’s business community has balked at that possibility.

“This budget should not and cannot be balanced on small businesses outside of the core,” said Mark Cooper with the Calgary Chamber of Commerce.

Cooper said the chamber supports the city shifting some of the tax burden onto residents.

“We’ve got the highest ratio in Alberta and now it’s above the national average,” Cooper said.

Calgary’s business-to-residential property tax ratio sits at 3.93:1, but city administration is predicting non-residential properties will pay more than four times as much taxes as homeowners in 2019, if nothing changes.

Some of council’s tax hawks said Friday the city must squeeze its operating budget to curb the tax problem.

Other city council members have suggested the budget is reasonable, with increases reflecting inflation and the cost of new community growth.