Calgary mayor says latest tax relief plan that includes $60M in cuts goes ‘too hard’

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Calgary mayor says latest tax relief plan that includes $60M in cuts goes ‘too hard’
WATCH: A new plan aimed at reducing Calgary business taxes goes to council Monday morning but it will come at a big cost that Mayor Naheed Nenshi says goes "too fast for marginal improvements." Carolyn Kury de Castillo reports – Jun 9, 2019

Calgary Mayor Naheed Nenshi says the latest plan to reduce commercial tax bills this year could end up hurting Calgarians.

On Friday, a group of 10 councillors released a new proposal that would see nearly $131 million used to cut bills for non-residential taxpayers by 10 per cent.

“I thought we were in a good place, with 14 members of council having agreed to actions, which would have given most small businesses a large break and kept their tax bill essentially the same as last year,” said Nenshi in a Facebook post on Saturday.

“I believe that new plan goes too hard, too fast for marginal improvements. While it would help some small businesses more than the previous plan in the short term it could hurt other Calgarians, and may go on to create a larger structural problem next year when property taxes return to the status quo… There is no way this won’t mean cutting things that matter to Calgarians.”

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The plan that was proposed on Friday would require $71 million from funds that have already been set aside for tax relief, while another $60 million would come from budget cuts that could include job and service reductions.

Ward 9 Coun. Gian Carlo Carra said the city’s revenue system collection system is broken and needs a complete overhaul. He says politicians and property owners have to face the fact downtown property values are not bouncing back.

“There is the understanding that our residential property tax base which is the lowest in Canada, is getting a really sweet deal and they’re getting it on the backs of businesses. And now that our revenue collection system is broken because the downtown just evaporated in value, that money is being transferred completely inappropriately onto our small businesses,” Carra said.

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WATCH: A group of Calgary city councillors are backing a new proposal that would cut commercial property tax bills by 10 per cent this year. Richard Truscott from the Canadian Federation of Independent Business joins Global Calgary to talk about what options are available to council.

Click to play video: 'New Calgary tax proposal would see cuts to service, staff'
New Calgary tax proposal would see cuts to service, staff

On Saturday, Premier Jason Kenney told reporters in Calgary that the province is doing its part with the business tax cut but didn’t comment on tax reform.

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“We are doing our part and ultimately the city has to get its fiscal house in order,” Kenney said.

Carra said Calgary’s tax shift problem needs a long-term solution that requires the province to get on board with.

“In the same way, Premier Kenney has gone to Ottawa and said we have to talk about this equalization particularly when our economy is hurting, the same conversation has to be had from Calgary to Edmonton. The same conversation needs to be had between the business community that’s paying the lion’s share in a small part of the city versus the entire city that are the net beneficiaries of this relationship,” Carra said.

Carra said the issue should not be framed as a spending problem in Calgary.

“You can make the argument that we spent too much money. But we don’t compare to other Canadian cities and we don’t in terms of what we charge our citizens. The problem is that we collect this money in an unfair and unequal way and I think people have to pay what things cost,” Carra said.

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Ward 3 Coun. Jyoti Gondek said on Twitter Saturday night that she is supporting the short-term plan because “a permanent solution is in the works.” She said: “I applaud my colleagues who brought the relief plan forward and stand with them. We have much more work to do but this is a start.”

Local business owners planned a rally at city hall on Monday at 7:30 a.m.

“I think [the latest tax relief plan] has to go through right now and be a starting point and councillors need to get together and work harder at a longer-term plan,” said Trolley 5 Brewpub owner Ernie Tsu on Sunday.

Mayor Nenshi said cutting city spending should be part of the solution as well.

“We didn’t talk much about the $600 million in cuts the City made between 2015 and 2018 because we made those changes carefully to create the least harm for Calgarians,” Nenshi said.

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U of C economist Trevor Tombe said the problem comes from the drop in property values downtown and the plunge in municipal revenues that resulted.

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