Property tax ratio needs to change to help business community: Gondek

‘Right now, we’re at the bottom of the list for being business-friendly based on our tax regime,’ said Mayor Jyoti Gondek

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As Calgary city council prepares to enter budget deliberations next month, the city’s property tax split between commercial and residential properties is sure to be up for discussion.

And Mayor Jyoti Gondek says the current ratio needs to change to take the strain off local businesses, which bear the brunt of the city’s tax burden.

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“Calgary is badly lagging in terms of how business-friendly we are based on our property tax regime,” the mayor said Thursday. “In other places, the proportionality is more like 40 per cent business, 60 per cent residential.

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“We’re still hovering at about 48-52.”

Gondek’s comments came during her annual address to the Calgary Chamber of Commerce, held Thursday at the Telus Convention Centre.

During a question-and-answer session with Chamber of Commerce CEO Deborah Yedlin after her speech, Gondek said the proportion of taxes paid by the business community is too high compared to similar cities in Canada. She argued the property tax formula has hindered Calgary’s business-friendly reputation.

Speaking to reporters afterward, the mayor said other jurisdictions’ tax ratio between their non-residential and residential properties hovers around two-to-one or 2.5-to-one. Calgary’s is around 4.6-to-one.

And if that ratio climbs to five-to-one, the provincial government would intervene, Gondek warned.

“I’d prefer to set our own destiny and make sure we’re making proper decisions in the interest of Calgarians,” she said. “That’s why I’m very focused on doing the right thing this budget season.”

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Last February, council voted 8-7 to maintain the property tax status quo, despite a request from business leaders to redistribute more of the tax load to residential properties.

“We can fix that as a council if we just have the willingness to do it,” Gondek said. “We just need one more vote compared to last year and we can actually do the right thing for the business community.

“Right now, we’re at the bottom of the list for being business-friendly based on our tax regime.”

Council will receive budget packages on Nov. 7, with deliberations set to begin two weeks later.

Report sheds light on Calgary’s skyrocketing commercial property taxes

A report published earlier this month by real estate research firm Altus Group seems to bear out Gondek’s comments.

The study found that, in a survey of 11 major Canadian cities, Calgary experienced the largest increase in the commercial-to-residential property tax ratio in 2023.

While the average among those 11 cities increased by less than one per cent in 2023, Calgary’s ratio jumped by 9.5 per cent, Altus Group’s report stated, with Calgary “continuing the trend of increasing its rate significantly for the past two years.”

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In the past decade, Calgary’s commercial-to-residential ratio has increased 49 per cent, according to Altus Group, while the same ratio has risen by 11 per cent in Edmonton.

The Calgary ratio this year means a local commercial property owner would pay more than three times the property taxes of a residential property owner with a similar value.

Chamber advocates for 2.8 to one ratio

Yedlin said the organization has long called on the city to readjust the property tax split.

“We have been talking about this for as long as I’ve been CEO — and before that as well,” she told reporters on Thursday.

During her fireside chat with Gondek, Yedlin brought up an internal survey the chamber conducted, in which 90 per cent of members indicated they’ve been negatively affected by rising commercial property taxes.

Mayor Jyoti Gondek and Chamber of Commerce President and CEO Deborah Yedlin
Calgary Mayor Jyoti Gondek chats on stage with Chamber of Commerce President and CEO Deborah Yedlin at a Chamber of Commerce noon hour event in Calgary on Thursday, October 26, 2023. Jim Wells/Postmedia

Those higher taxes translate to profit losses, the need to raise prices and even hiring challenges, Yedlin said.

To ease the pressure on businesses and encourage more of them to set up shop in Calgary, she said the chamber is advocating for a 2.8-to-one ratio.

“I think we’ve been pretty focused on that number and we’re not going to deviate from it,” she said.

— With files from Chris Varcoe

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