Calgary may see a shift in the outlets from which it collects revenue.
Recommendations from the Financial Task Force suggest deviating from the reliance on property tax and instead maximizing revenue from other sources. This includes potential generators that already exist or will be new in the future due to a transitioning economy.
The task force comprises of 12 citizen members with experience in business strategy, policy formulation, property valuation and finance. They addressed Calgary’s cyclical economy and impact of the decline in the value of non-residential properties.
The group’s report was delivered to a strategic meeting of council on Monday.
“Our reliance on property tax as a primary revenue vehicle makes it very difficult,” said Carla Male, the City’s chief financial officer and member of the financial task force.
“We anticipate the world economy changes now coming even faster as it responds to working from home.”
Return on assets, investments or proprietary charges
This includes getting addition revenue from return on assets and investments or proprietary charges that already exist such as:
- From implementing a strategic review of business activities of municipal corporations such as ENMAX or Calgary Parking Authority.
- Generate recurring fees from the use of city assets and one-time sale of excess capacity or assets (such as land that’s not used or required).
- Generate returns from public-private partnership such as golf courses.
Those that might work in the future could be:
- Investing in infrastructure for broadband to gain long term dividends, partnerships with the telecommunications industry.
- Data and other exchange value assets for private sector services or dollars to limit cost pressure.
Current ones may be:
- Exploring franchise fees or local access fees for services in the that don’t pay property tax
- Advertisement charges for billboards, digital ads, etc.
- Licensing charges for business vehicles provides opportunity for targeted relief when needed for businesses
- Extend business licensing requirements to a variety of home-based businesses
For the future:
- Franchise fee-type charges for regulated assets to reflect the transition to the new economy, such as 5G infrastructure.
Current implementation of user fees may include:
- Memberships and long-term subscriptions to services such as golf courses.
- Charges for the use of proprietary assets like data.
- Delivery of non-essential services only if the cost can be fully recovered through fees
- Apply total cost for municipal services with resident discounts for certain services (e.g. park and ride) to achieve differential user fees
User fees in the future may be:
- Licenses for new economy modes of transport such as e-scooters, ride-sharing.
- Vehicle permitting charges with the transition to driverless cars
Taxes that can implemented are:
- For tourists and visitors that use City services
- Work with the provincial government to share revenue during “boom years” as a rainy-day fund (similar to the Heritage fund)
Taxes that may be implemented in the future:
- A separate property tax for non brick-and-mortar businesses
- Taxation for e-commerce that generates revenue through local goods and services
- Tax for home-based small businesses that will increase due to the new economy transition
- Different tax rate if a home is used as an office, but address the trend towards increase work from home.
Reviews from councillors
There were 35 recommendations in total to develop strategies related to short-term mitigation measures, long-term solutions, and new revenue options that would improve the financial resiliency of the city.
While most members of council generally agreed with the overall plan, there were some issues regarding specific recommendations. Some were concerned with the taxes.
“I think about taxation and the increased tax. Some stuff I agree, I totally agree, but at the same time I’m also scared,” said Coun. Sean Chu.
Coun. Druh Farrell said taxation is a really important tool to bolster our city goals, but it depends on how you do it.
“It can either strengthen our goals or actually hinder our goals in mind when looking at a more resilient taxation system.”
Coun. Jeromy Farkas said he doesn’t agree with the recommendations provided.
“I think as we emerge from COVID-19 and the global recession and work to compete on the world stage, we need fewer taxes, not more,” he said.
“Calgarians need these new taxes like they need a hole in the head.”