On the heels of the June 30 property tax payment deadline across the province, the Canadian Federation of Independent Business (CFIB) released a new study that claims small business in Alberta continues to pay a large percentage of municipal property tax.
CFIB’s research shows 250 of 349 municipal governments (72 per cent) charged small businesses higher property tax rates than residents on the same property value in 2010.
“Small business is tired of being treated like a cash cow. If Alberta is to remain a small business-friendly province, there’s a long list of municipalities that must find a much better balance between commercial and residential taxpayers,” said Alberta CFIB director Richard Truscott.
The report provides a summary of property tax data for all municipalities by size and region, with a focus on 88 municipalities with a population over 5,000. The main data point in the report is the “property tax gap,” which measures the differential between commercial and residential property tax mill rates. On average, small businesses across Alberta pay nearly twice as much property tax as residents on the same assessed value, with the gap rising slightly in 2010 to an average of 2.37 (compared to 2.36 in 2009) for the group of 88 larger-sized municipalities. The report also revealed the average property tax gap for those 88 municipalities has increased by 45 per cent since 2003.
Suzette DeMott, manager of assessment taxation and utilities with the City of Airdrie, said there is a good reason for the gap.
“Non-residential uses require the use of heavy trucks and draw in more traffic, requiring more regular roads maintenance,” she said.
“Police, fire and utility services are also used more frequently by non-residential properties and that costs the City more to take the services out to them.”
Airdrie’s property tax gap for 2010 was 1.85 and is ranked number 50 in the province. The Calgary region’s 2010 average property tax gap is 1.95 and the provincial average is 2.37.
Calgary is the worst offender for cities with a property tax gap of 4.49. The top three worst gaps for all municipalities in 2010 were: Ponoka County (6.01), Wetaskiwin County (5.25), and Lac La Biche County (5.15). Calgary had the sixth highest gap overall, Edmonton was 25th.
Fifteen of Alberta’s 19 cities experienced a small reduction in their property tax gaps in 2010 compared to 2009, causing the average tax gap (including extra business taxes) for all cities to drop from 2.29 to 2.12. However, as the report notes, the decrease was largely the result of relative changes in the assessment base for residential versus commercial property due to recent economic conditions, as opposed to deliberate policy changes by local governments.
“With the economy now recovering and commercial versus residential assessments about to change again, unless meaningful action is taken, we fully expect property tax gaps across Alberta to grow further over the next few years,” said Truscott.
“Municipal politicians across the province must step up, focus on this important issue, and make the system much more fair and equitable for small business.”
Reducing the tax burden on small businesses doesn’t necessarily mean that residents should pay more, Truscott said. CFIB has outlined a series of recommendations to provincial and municipal governments so the property tax system can be rebalanced over time.
Airdrie’s non-residential tax rate including school requisition is the second lowest in Alberta at 10.9 per cent, according to DeMott. Only Fort Saskatchewan was lower at 10.7 per cent. Grande Prairie is the highest at 21.4 per cent.
“We do have property taxes but we do not have a business tax and that is a huge benefit for businesses in Airdrie,” said DeMott.
“Property taxes are not on a level of service basis, you pay taxes based on the value of the property.”
In Airdrie 85 per cent of the taxable property is residential, while 15 per cent is non-residential. In 2009 in Airdrie, 75 per cent of the total taxes were paid by residences, while 25 per cent were paid by non-residential taxes.
In the Airdrie Business Satisfaction Survey that was conducted in February, 89 per cent of businesses said Airdrie is a great place to do business. On average, the City issues about 50 new business licences per month.
“We have an entrepreneurial spirit,” said Kent Rupert, City of Airdrie economic development team lead.
“We have a really good energy; no business taxes; amazing transportation connections with Highway 2 and Stoney Trail; our population continues to grow, which means guaranteed workers and our annexation plan means we have the opportunity to welcome even more businesses.”
The full report containing data for every municipality and backgrounders grouped by region and size is available at www.cfib.ca/ab
