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Calgary property tax: When a zero isn’t really a zero

Calgary city councillors were provided two new budget scenarios Tuesday, each with a different property tax rate increase and a set of cuts to go with them.

These property tax increases, and corresponding cuts, are on the tax-supported services portion of the Calgary budget. In addition to tax support, the city also relies on user fees (eg: recreation, transit fares) to provide city revenue.

What’s perplexed some is how Calgary property tax bills could still go up even if council agrees to a zero-per-cent increase. Calgary’s property tax system isn’t an easy one to figure out to start, and when you add in the different layers it can become even more opaque.

Below are factors that will influence whether a zero per cent tax increase results in a zero on your property tax bill (or close to it):

Market value assessment

This is the provincially-mandated way the city gets to the property tax bill annually. The city’s revenue neutral taxation system determines the annual budgeted needs compared with the total assessed value of all the residential properties. City description can be found here.

If your property value increases or decreases relative to the change in overall assessed value of all residential properties in Calgary, then you may see a property tax increase or decrease – even if council agrees to a zero per cent.  This is something that can happen annually, regardless of the tax rate increase or decrease.

Residential / Non-residential – The ‘tax shift’

You’ve probably heard the term ‘tax shift’ in relation to how the market value of downtown Calgary business properties collapsed, spreading a greater burden on to small and medium-sized Calgary businesses.

The city’s tax-supported revenue base comes from residential and non-residential properties. The Tax Assessment Working Group put together different scenarios for a change in the ratio of tax revenue reliance on each area.  

Should this change put more responsibility on Calgary homeowners, even with a zero per cent mandated tax increase, the average homeowner could see their property tax bill rise, reflective of the change in this ratio. It will be discussed by city council on Nov. 18.

“In the event that proportionate share changes, that’s another driving force for what the amounts will show on the property tax bills,” said City of Calgary Chief Financial Officer, Carla Male.

Not Calgary property tax, but a provincial education one

There’s another area to note that isn’t directly related to your Calgary property tax rate but will influence the end amount on that Calgary property tax bill.

The province collects education tax through Alberta municipalities. It does so by putting a tax on properties (residential, non-residential, farmland) through a similar market value assessment.

This provincial tax may look like a civic tax, because it’s collected through the Calgary property tax bills.

The city is looking into more clearly defining on annual property tax bills that portion of the property tax bill and showing whether it has increased or decreased and the net result on your property tax bill.

For a more detailed explanation on the provincial education tax, visit this page.