TBD | NAIOP Calgary
Business Advisory Committee Update
Update Provided by Councillor, Ward Sutherland
It’s come to my attention that many business owners are not aware of the tax shift and advocacy for businesses during the Covid-19 Crisis. Additionally, not aware of the City of Calgary Business site for one-stop information hub for business owners (Calgary.ca/covid-business).
The overall tax increase approved by Council was a 1.5% increase for the entire budget. There was then a provincial increase to the police budget of $13M, which equals an additional .75% tax increase. It should be noted that this was a “flow through” cost, meaning the City had to come up with the funds, not the Province.
Council approved an internal tax shift between businesses and non-businesses (residential), resulting in a 52% residential and a 48% non-residential (business) split. Businesses have been carrying an unfair percentage of the tax load for years and this shift is long overdue. For example – when a home owner pays $1000.00 tax, the comparative business tax would be $4750.00 (which means the business is paying at a 4.75:1 ratio). The average ratio across Canadian cities is 3:1. With the change in the Calgary tax shift, the Canadian average is now 3.21:1. This internal tax shift represents a 6.76% increase to homeowners and a 10% decrease to businesses. Without this shift, many of your local businesses would go under. (see 2020 Adjustments attachment)
The net result to homeowners is an overall tax increase of 9.01%. The City then gave a one-time rebate of 1.5%, for a new net of the current 7.5% increase.
The City of Calgary is currently losing $15M a week and several of our civic partners such as the Calgary Zoo and Community Associations will have to be bailed-out by The City. The City’s current savings and reserves will be repurposed over the next several months to pay for this. There are no funds available for a property tax rebate because we will need them for the losses mentioned above, and the resulting shortages.Furthermore, it is against the law within the Municipal Government Act (MGA) for Municipalities to run a deficit, and therefore The City must balance the books at the end of each year.
Cities do not have the same financial capacity as the Provincial and Federal governments do. In fact, some municipalities may go bankrupt during this crisis. Liquidity is an issue for every single city in Canada. We have asked for a backstop from the Federal Government. To date, we do not know what that will be.
Property tax is the only revenue the City has to pay for Police, Fire, Transit and Roads, which is 86% of the entire budget, as well as Recreation, Parks, Waste & Recycling and numerous other essential departments. In all, there are 68 different services which must be accounted for. You can find the 2019-2022 Budget breakdown of these services in the following link: https://www.calgary.ca/_layouts/cocis/DirectDownload.aspx?target=http%3a%2f%2fwww.calgary.ca%2fcfod%2ffinance%2fDocuments%2fPlans-Budgets-and-Financial-Reports%2fPlans-and-Budget-2019-2022%2fService_Plans_and_Budgets_2019-2022.PDF&noredirect=1&sf=1
This vote also included deferring property taxes for businesses and homeowners until September 30th 2020, which was passed by Council. Additionally, The City will be carrying the costs of utilities and water deferrals offered by Enmax. These numbers do not include the losses in default taxes. The estimated cost for these programs is over $200M. I have also attached the financial overview presented at Council. (see infographic on advocacy attachment)
Councillor, Ward 1
Office of the Councillors | The City of Calgary
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