$45 million in tax relief: Our first big win for your business in 2017

January 27, 2017

This week, Senior Policy Analyst Lauren Webber unpacks the recently announced $45 million business property tax relief program, and what it means for your company in the coming year.

Facing down the barrel of shocking property tax assessments in a struggling economy, Calgary businesses have really been feeling the pinch this January. That's why your Calgary Chamber has been working with the City of Calgary to find a pragmatic and common sense solution to help support struggling businesses in our city: a $45 million business property tax relief program.

Here's the skinny

If you're in a hurry, here are the highlights with more detail below:

• Expanding your business's influence, we've worked with the City to create a $45 million program to provide business property tax relief.
• If you saw a big increase in the assessed value of your property, it will be reduced to no more than 5% for 2017.
• If you feel your assessment is unfair or incorrect, you should still appeal it.
• It is still possible your business property tax may go up in 2017 in a variety of ways, however this move should help mitigate that impact.
• This property tax calculator provided by the city may help you in estimating your 2017 business property tax (called non-residential property tax).
• Over the long term, we still need tax reform in Calgary, which your Chamber is keenly focused on.

Now, the full story

As a result of declining downtown property values, businesses outside the downtown core saw significant property tax increases in their assessments mailed out early January – some of your fellow members faced the prospect of assessments 30% or more higher than in 2016. This was untenable, and we knew something had to be done.

A $4 billion drop in assessed property values in Calgary’s core is resulting in the redistribution of taxes from downtown to surrounding communities. More than 6,000 businesses in Calgary suburbs would have seen their taxes increase significantly because of these lower assessed values downtown.

To help businesses in their time of need, the City in partnership with the Chamber and Calgary Economic Development, announced a $45 million one-time, non-residential tap cap.

This one-year Municipal Non-Residential Phased Tax Program will limit non-residential municipal assessment increases to a maximum of 5% and will provide temporary relief for many businesses facing financial hardship.

The Chamber worked directly with the City Manager, helping to determine an effective and fair model to relieve the extra tax burden being placed on many businesses. This is another example of how the Chamber works to support your business by working to make our city the best place to live, work and grow a business every day.

But the Chamber’s work doesn’t stop here. This aid doesn’t solve the structural problems we have, nor does it represent a long-term fix.

The $45 million tax relief fund is a good short-term solution to relieve some of the pain felt by many Calgary businesses. However, on it's own it wont heal the problem; the relief fund will not assist struggling businesses of future tax payments beyond 2017. In 2018, property assessments will no longer be capped at a 5% increase and Calgary business community will be face this issue again.

Businesses already pay more that 3x more than residences for the same property, and fixing these problems over the long term will require tax reform.

There is a greater question here on tax reform in Calgary and our broader civil fiscal governance. Calgary needs a financial model that can better adapt to the swings we see in the economy – without penalizing business. One that better balances the tax distribution between residential and non-residential.

Also, a cap on business property tax increases does not include the effect of business tax consolidation or any potential provincial property tax increases, which will be released in early spring.

The policy team will continue to bring these policy alternatives forward to the City over the coming months, and together we will find solutions that will keep Calgary a competitive place for business.

Lauren Webber is a Senior Policy Analyst at the Calgary Chamber.