How a property tax freeze could still result in a tax hike for Calgarians

A panel set up by Calgary city council to look at the tax system presented options to council committee on Tuesday, none of which anyone seemed happy about.

The tax shift working group provided various scenarios on how council can deal with the ongoing shift in the tax burden from the downtown core to business properties elsewhere in the city.

Specifically, it looked at the three prospective levels of taxes council is weighing for the 2020 budget and then mixed in another tax shift — moving some of the tax burden from non-residential properties to business accounts.

Among the scenarios is the situation where council could support a tax freeze for 2020 but a shift in the ratio between homes and businesses could result in tax increases for homeowners.

Combine that with the fact city council has no cash on hand for another year of tax rebates and even with a reduction in the tax burden for businesses, they too could still see tax hikes in 2020.

Coun. Jyoti Gondek, one of the panel's members, said it provided the range of options for council but made no recommendations or ranking.

In all, there were nine options.

3% tax hike already approved

Council has already approved a property tax increase for 2020 of just over three per cent. However, it has asked administration to outline the impacts of a 1.5 per cent tax hike as well as a tax freeze.

For each of those scenarios, the working group laid out the impacts of a shift in the tax burden from the existing 49 per cent/52 per cent residential/non-residential ratio, to a 50-50 share, to a 52-48 split.

One of the quirks: even with a tax freeze from council for 2020, the largest shift in the ratio would result in a tax hike for residential property owners.

As well, without a tax rebate for non-residential accounts in 2020, it would mean tax hikes for most non-residential accounts. 

Gondek said she favours a bigger shift but acknowledged there would be pain for many property owners.

"This whole thing is a giant schmozz. There are all kinds of different scenarios you can run. Some of them will generate a decrease. Some of them will generate an increase," she said.

"Some of them, no matter how great that decrease is — because we have created this habit of giving a rebate every year — it's going to be a hard increase for people to take. None of this is easy and it's very messy."

No rebate in 2020

The scenarios are complicated by the fact that unlike 2019, council is unlikely to be rolling out a rebate program for a fourth consecutive year to assist business property owners.

Mayor Naheed Nenshi said after council approved a $70-million package this year which resulted in a ten per cent tax cut for businesses, the cupboard is bare.

"Council spent all the money this year and created a bow wave. My proposal had been to spread that out over two years. We spent it all in one year," said the mayor.

He again referenced his long held position that the existing property tax system isn't working for many people and there's a need for reform.

"It's mostly unfair to senior citizens and to small businesses because you're taxed on the value of your land, not the income you're making off that land."

Coun. Jeromy Farkas said he's opposed to shifting the tax burden from business properties to homeowners because it doesn't address to root cause of the tax problems at city hall.

He wants an overall drop in spending so not as much tax revenue is needed.

"There's no where else to shift the burden to. We have to live within our means."

Spending problem

City council did approve a $60-million budget cut this year to help pay for the tax cut for businesses. 

But Coun. Ward Sutherland pointed out even a budget freeze for 2020 still means a cut in city services.

So when there are calls for cuts, he wants people and politicians to spell out what they're prepared to give up as well as what they value.

"If you want this, then what do you not want? And that's going to be hard decisions this coming November," said Sutherland. 

The city has signalled it wants to close two pools. But there is some public opposition to closing the Beltline and Inglewood swimming facilities.

Sutherland said council has been told for every person that visits one of its lowest attended pools it costs the city $18 to subsidize each user.

"Well, how long do you do that?" asked Sutherland.

"We can't say: let's keep this pool that we're losing a ton of money on open but let's cut all the taxes."

City council will discuss next year's tax rate and adjustments to the 2020 budget in the last week of November.