Calgary city councillors went in looking at a zero per cent tax cap for city businesses and came out with something quite different.
The new package is targeted towards Calgary small businesses and away from larger, multinational corporations.
Originally, Ward 11 Coun. Jeromy Farkas pitched the zero tax cap, which was approved at the Feb. 16 Priorities and Finance committee.
After an amendment put forward by Ward 6 Coun. Jeff Davison, Calgary will go back to a 10 per cent tax rate cap for non-residential properties. That will cost the city $13 million. This is something originally budgeted for at the November 2020 mid-cycle budget adjustment.
In addition, a $30 million fund will be created and directed to Calgary small and mid-sized businesses directly impacted by COVID-19.
Coun. Davison said 56 per cent of cash under that plan would have gone to funding publicly-traded corporations or private equity funds. He said it needed to go to smaller Calgary businesses that weren’t profiting during the pandemic.
“What we really need is a mechanism to better support those small businesses, the folks that are not making money during this pandemic and figure out a way to give back to those businesses, those Calgary businesses versus the corporations that are making record profits during this pandemic,” Davison said.
The $30 million would be directed to small businesses through Calgary’s COFLEX Program and with advice from the Business Advisory Council.
The total cost will be $44 million.
The tax shift
Property tax rates were set to rise between seven and 25 per cent for several business types this year. Large warehouses would have seen the biggest increase. Strip retail businesses would also have seen a big jump. This plan will cap any increase at 10 per cent.
Mayor Naheed Nenshi said a large part of this year’s tax shift is a loss in value at Calgary hotels, hit hard by the pandemic. He said the previous motion helped those that didn’t need help and didn’t help those that did need it.
And, the mayor said, it mitigate the dreaded bow wave.
“I actually believe that what you have before you Councillor Davison’s amendment actually really, really goes a long way to helping with the bow wave problem because it holds the bow wave to that 10% increase,” Mayor Nenshi said.
Coun. Druh Farrell, who wasn’t going to support the initial recommendation, said she would support this amendment.
She warned, however that this continues to treat the symptom and not the problem. It will be the fifth year in a row Calgary has provided business tax relief. She equated the problem to the Eau Claire YMCA recreation issue and a hollowing of the downtown.
“We need to focus on the problem, not the symptom of the problem, which is the tax shift,” she said.
“We need to focus on downtown recovery.”
The Calgary Chamber of Commerce said they were encouraged by the new plan.
“Today’s measures point us in the right direction, but many businesses in Calgary will still see property tax increases next year due to structural problems within the tax system, and the shift of the tax burden from the high rises in our downtown to businesses outside of the core,” their statement read.
Editor’s note: The original piece was amended to clarify that the original motion by Coun. Farkas was later amended by Coun. Davison.