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‘I’m going to be pretty livid’: Calgary councillor urges city council to quit avoiding the tax shift problem

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WATCH: Calgary city council will hear from citizens at a public hearing Monday as it prepares to tackle the 2020 budget and the touchy issue of the tax shift problem. As Carolyn Kury de Castillo reports, a proposed solution that would help businesses will mean a property tax increase for homeowners – Nov 24, 2019

Calgary’s 2020 budget deliberations start on Monday with members of the public invited to take part.

Council has already approved a three per cent property tax increase for 2020, but earlier this year, it asked administration to present scenarios for a 1.5 per cent tax hike and a tax freeze.

One of the issues that is expected to come up again this week is the so-called tax shift problem.

Some businesses in Calgary have seen property tax hikes that have been the highest among major cities in Canada — a result of the big drop in the assessed values in the downtown core.

As a small business owner, Troy Sedgwick worries about the property tax hikes some of his fellow Calgary entrepreneurs have been hit with.

“It’s putting them out of business and that’s going to hurt all of us as Calgarians, so I think it’s critical that we deal with it,” said Sedgwick, CEO of Rec Media Inc., on Sunday.

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To deal with dramatic property tax hikes for businesses outside of downtown, city council made $60 million in budget cuts in July and provided a one-time rebate of $70 million that saw businesses pay 10 per cent less tax in 2019 than they did the year before.

READ MORE: Number of options could shift tax burden in Calgary to homeowners from businesses

An Assessment Tax Shift group presented its final report to a city committee in October and came back with several solutions.

Those included having a 50-50 split between what homeowners and businesses pay in property taxes, the status quo of 51-49 in favour of homeowners and a 52-48 split in favour of businesses.

Coun. Jyoti Gondek supports the 52-48 split because she believes it will get the city to a place that is more equitable.

“It has been a long time where 20 per cent of the revenue stream has been covering 55 per cent of the budget, but that is crazy. It’s unsustainable and that is why we are where we are.
I don’t want to see homeowners paying more in taxes but this is what we have in front of us right now,” Gondek said.

She said if council came back with a zero per cent operating budget increase, homeowners would face a tax increase under the 52-48 formula. A median assessed home at $455,000 would face a tax bill of $2,136 — an increase of $136 a year.

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“That’s why it’s even more important right now to try and find some savings in the budget with some of those non-essential or non-core services,” Gondek said.

“I’m going to be pretty livid if we push this down the road again. We can’t keep avoiding the reality that our proportion doesn’t work.”

But some businesses and councillors are worried council will do what it did last year when it failed to address the tax shift problem during budget discussions.

“It should not matter at all what budget we set. Unfortunately, my colleagues don’t agree with me because they want to be able to see how much more their voters are going to be paying,” Gondek said.

READ MORE: 3 Calgary councillors suggest 5% spending cut, others call it ‘ludicrous’

Sedgwick said as a homeowner and member of the Entrepreneurs’ Organization Calgary Chapter, he supports a residential property tax increase to help save local businesses.

“If we don’t want to make those cuts and we want to maintain our snow removal and maintenance of our parks and these wonderful things that give us the quality of life, we need to be able to say, ‘OK, I’m willing to participate and be part of the solution,'” Sedgwick said.

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“Your neighbourhood pub, your neighbourhood restaurant, coffee shop or bookstore are going to close down, and if they close down, unemployment increases and people start to leave the city, which further erodes the tax base.”

Citizens will be able to speak at the council meeting on Nov. 25 by registering with the City Clerk’s Office at 403-268-5861. Free childminding will be available for people wishing to speak with members of council on Monday.