Caving to intense public pressure, Calgary Mayor Naheed Nenshi and city council voted unanimously on Monday during an emergency meeting to provide some tax relief for the city’s small business community, which launched a tax revolt in the face of escalating businesses taxes.
Council voted to cut $60 million from the city’s budget and to direct $70.9 million towards business rebates, effectively chopping the non-residential property taxes by 10 per cent this year. The move was made hours after several hundred small business owners held a protest rally outside the steps of City Hall.
“The 10 per cent commercial property tax cut seems to me to be a reactionary and ineffective measure that goes nowhere to acknowledge and deal with the real problem with how property taxes are allocated and applied and just kicks the can down the road again,” said Michael Kehoe, a retail real estate specialist and broker/owner with Fairfield Commercial Real Estate Services. “Calgary risks being perceived as a business unfriendly jurisdiction as this mess rolls out in the media and online. Our civic leaders need to sort this out in an equitable and timely manner and help our city get its entrepreneurial mojo back.”
About 200 small business owners rallied on the steps of City Hall early Monday morning to protest the big municipal tax hikes they face and to demand a solution from Nenshi and councillors.
“We’ve been hearing a lot of frustration and a lot of anger and council by letting those tax bills go out have lit a fuse. They’ve done this to themselves and push has come to shove and finally small business owners are pushing back,” said Richard Truscott, Alberta director of the Canadian Federation of Independent Business.
“They’re really disgusted by the fact that small businesses in this city continue to be treated like a cash cow by the mayor and council and it’s got to stop.”
The rally was organized by a group called I Heart YYC Small Biz.
Thousands of businesses are getting tax bills with major increases. The increases were introduced by city council to offset the sharp decline in tax revenue coming from the downtown core, where office vacancies remain high.
A group of city councillors has offered a solution to cut taxes. It’s being debated on Monday at City Hall.
“First, we’ve committed $71 million from our rainy-day fund to help these outrageous tax hikes come down,” said Councillor Jeff Davison. “There’s no doubt that it’s raining hard right now and we need to protect businesses.
“Second, our plan will direct city administration to find an additional $60 million in operating budget cuts by the end of July. This is $131 million that will ensure that the 2019 non-residential rates will not increase over the 2018 rates. That in fact will also ensure a cut from those 2018 non-residential rates happens,” said Davison.
Truscott said the city needs to find a long-term solution to the tax crisis.
Business owners pay up to 4.5 times more than residential property owners, based on the same assessed value. Trustcott said action must be taken now and he was glad to see so many small business owners at the rally on Monday, pushing back and holding city council to account.
“This is really something. The only time I’ve seen this level of frustration and anger is a couple of years ago when the federal government tried to change the tax rules on small business and pull the rug out from under their feet. This is something. I’ve never seen this at the municipal level.”
Earlier, Kehoe said small business owners are under pressure.
“We’re hearing that Calgary has lost its competitiveness. Retailers are under pressure in a soft economy with rising costs such as property taxes and it’s really affecting their bottom line and their competitiveness,” he said.
If the problem doesn’t get fixed, Kehoe said it will lead to some small business closures, while other stores will be under pressure to save costs by taking measures such as laying off staff.
“There is a tax revolt happening in the business community in Calgary. People are really upset and their voices are being heard by council,” said Kehoe. “Council’s under pressure to find a solution and I think the small business community is finally mobilizing to fight back to city councillors, who have not performed. They basically killed the goose that laid the golden egg in our retail and our food service community in Calgary.”