By: Paige MacPherson, Amber Ruddy and Stephanie Kusie
When faced with a slumping economy, residents and businesses pore over their expenses with a fine tooth comb to ensure value for the services paid for. People often complain about their property tax bill, but is there any merit to the grumbling?
A recent report released by the Canadian Taxpayers Federation sheds some light on how drastic the City of Calgary’s hyper-inflated tax and fee increases really are.
Between 2005 and 2015, Calgary’s municipal property tax rate increases were almost triple the rate of inflation. Between 2005 and 2010, the average rise in the residential property tax rate was 4.6 per cent, while inflation rose by just 2.6 per cent.
On fees paid by Calgarians, the increases ranged from a 0.1 per cent decline, to as high as a 181 per cent increase; with 12 of 15 fees surpassing the overall 24.2 per cent rise in inflation over that 10-year period.
Under Mayor Naheed Nenshi, property taxes have spiked even higher and faster. Since 2011, the average annual rise in the residential property tax rate was 7.6 per cent. Inflation only rose by about 1.7 per cent each year.
For businesses, the picture is just as bleak. Between 2007 and 2015, the non-residential property tax rate has risen on average by five per cent per year — two and a half times the average annual rise in inflation over that period.
It is realistic to expect a small uptick in municipal taxes and fees, but the city’s poor budgeting decisions have far outpaced the sustainable benchmark of inflation and population growth. Drastically escalating property taxes and fees are placing an undue burden on citizens.
What is driving city expenses — and in turn, making taxes and fees go up? The largest line items are the wages, salaries and benefits of government-sector employees, clocking in at 45 per cent of the total tax-supported expenditures. The CFIB calculates that from 2003 to 2013, Calgary overspent by $3.6 billion. That means each household shelled out $8,500 for excessive taxes over that period. It is inevitable that more prudent management of these costs must occur if taxpayers are to see any relief.
Yet, the city suggests the current property tax revenue model doesn’t work. Nenshi has claimed for years that the city needs new sources of revenue and said new tax powers are key. But it’s difficult to accept the assertion that the city has a revenue problem when taxes and fees have soared beyond inflation and when spending has never been reformed.
Still, the mayors want more taxing powers, and presumably more and higher taxes through their constant pleas for a city charter that would deliver new taxing powers to cities. Revenue generation ideas that keep popping up include a municipal sales tax, a new vehicle registration tax, and new amusement and hotel taxes.
Businesses and residents are missing from the closed-door conversations between the provincial and municipal governments. Yet, they will foot the bill. Until our mayor and city council step up and take action on unsustainable spending that has already led to the above-inflation increases in property taxes and fees, why should economically squeezed Albertans trust them with any additional taxing powers?
When it comes to new tax powers for big-city mayors, the power lies with the premier. The See Charter, Think Tax coalition urges Premier Rachel Notley to grant residents the ability to have a say through a referendum. Democracy matters, even if the mayors think they know best.
This oped was originally published in the Calgary Herald on February 24, 2016.
Amber Ruddy is Alberta director of the Canadian Federation of Independent Business, Paige MacPherson is Alberta director of the Canadian Taxpayers Federation and Stephanie Kusie is executive director of Common Sense Calgary. See Charter, Think Tax is an Alberta-based coalition demanding that taxpayers and small businesses have their say in any new city tax powers.