New user fees, taxes in plan to revive local economy
A task force formed last August to examine paths forward for Calgary’s long-term economic recovery will present its recommendations to city council Monday.
The task force’s 35 recommendations identify possible revenue streams for the City of Calgary, including new fees and taxes, and place an emphasis on city taxes remaining relatively flat from year to year.
The report explains its recommendations are meant to combat the lengthy decline in the oil price that began in early 2014 and has led to a high office vacancy rate and an increased tax burden on private residences.
“Over the last 30 years, many economic cycles experienced by Calgary did not have an unusually prolonged impact on the valuations of the downtown office market,” says the report. “This time, there was a significant redistribution of the tax base that these properties previously carried to other properties.”
Currently, just over half of Calgary’s revenue comes from property taxes, accounting for about $2.09 billion in revenue in 2019. The next greatest portion of the city’s revenue is user fees, comprising about 32.7 per cent of all revenue.
Coun. Jyoti Gondek said she was pleased with the report, particularly with how it demonstrates challenges with crafting a local economic plan while requiring both financial and policy support from the federal and provincial governments.
She said another part of the report that stood out was recommendations to develop regional policies, including potentially sharing property tax revenues between neighbouring municipalities.
“My worry for a very long time is, we tend to get into arguments at council about how growth doesn’t pay for itself,” Gondek said.
“We don’t actually focus on the fact that the regional growth that is happening at our edges has actually caused us a lot more problems than the growth that’s happening in Calgary, because they’re taking away our tax base with no real clear model of how they’re going to manage the growth that they’re taking on.”
Among new taxes that the report asks council to consider are differential taxes that would apply to organizations such as business improvement areas, non-profit organizations and small businesses operated by an owner that has limited financial means.
Another new tax to be considered is one that would target tourists and visitors who are using city services. Small businesses based from home could also see a new tax, as well as e-commerce revenues that come from local activity.
Other areas where user fees or new charges could be introduced include golf courses, billboard advertisements, e-scooters and ride-sharing apps such as Uber.
A focal point of the report is prioritizing stable taxes over stable services from cities, meaning things such as garbage collection could potentially be reduced to prevent tax hikes.
“I think it’s really interesting and it requires us to look at our budgets differently,” Gondek said. “The levels of service we’re providing, are those the ones that best match up with the economic situation we’re in? It’s going to require us to do budgeting considerably differently than we have in the past, and I don’t disagree with that.”