It’s property tax time in Calgary. As City Council deliberates on the upcoming budget, with initial estimates almost guaranteeing a 10-20 per cent increase for property owners, now is an ideal time to call for a major overhaul of how our big cities collect taxes.
It is time to end residential property taxes.
Following a 2024 report from the Centre for Policy Alternatives that explored how much revenue could be generated for major municipalities if they were given access to income tax as a revenue source, it sparked an interesting inquiry that I pursued while at the UofC’s School of Public Policy – what if Calgary replaced residential property taxes entirely with income taxes? The results of my inquiry highlighted four things:
- Almost all lower-income, middle-class, and even some upper-class families would save hundreds, sometimes thousands of dollars a year.
- With proper regulations, local rents could see reductions approaching hundreds of dollars a month.
- Calgary could better handle provincial downloading of social services, healthcare, housing, and safety costs because citizens would have one tax bill for everything – their income tax.
- Housing costs become more sustainable for low-income individuals, people living on fixed income, and people receiving income supports from the province.
We’ve changed; property taxes haven’t.
Property taxes have never been perfect, but they made much more sense when city responsibilities were truly just the essentials. This is why many city leaders today campaign on the “get back to basics” platform.
The province is responsible for poverty reduction, healthcare, and mental health. But changes and cuts to these services have left the people most in need suffering in city parks, on public transit, in libraries, and more. This has led to increasing complexity and costs for all city staff, from parks employees to police officers and firefighters.
But property taxes weren’t designed for these types of services. Simply put, property taxes are designed to provide services everyone has access to without limitations – parks, policing, transit, sidewalks, etc.
When the provincial and federal governments start downloading things like healthcare, social services, and affordable housing to cities, property taxes have to increase to cover these new responsibilities.
Property taxes are considered a regressive tax, or one that takes up a higher percentage of lower-income individuals’ total income. Think of the senior citizen on a fixed income. When property taxes increase on a home they’ve already paid off, they have to find that money out of their already limited income to pay this increasing bill.
Income tax is a progressive tax, a tax that adjusts depending on how much money you make. So, a senior in that home pays tax on what they make, rather than the value of an asset they can’t liquidate.
If Calgary tacked on a special income tax to provincial income tax rates, they could eliminate residential property tax, save families money, and make tax time a whole lot simpler.
Time for math!
Let’s take a trip back in time to 2021, Canada’s most recent census year. If you eliminated property taxes on a typical home worth $500,000 in 2021, a family would see their $2,415 property tax bill disappear.
But to keep Calgary running, income taxes of a similar property tax amount would have to be collected. In 2021, the City collected $996 million in residential property taxes, or $4.83 cents on every $1,000 of your home’s assessed value.
To find out how best to raise $996 million in income taxes, I built a tax scenario for Calgary using Statistics Canada’s Social Policy Simulation Model and Database to model out a progressive municipal income tax. The special tax scenario would look like this:
| Tax Bracket ($) | Tax Rate |
| 0-100,000 | 10% |
| 100,000-131,220** | 10% |
| 131,220-157,464 | 12% |
| 157,464-209,952 | 13% |
| 209,952-314,928 | 14% |
| 314,928+ | 15% |
** This is a new tax bracket inserted to better capture the reality that 90% of Calgarians make less than $127,000 and that 50% of Calgarians made less than $44,440 in 2020.
***Provincial government introduced a new tax bracket in later years that helps to capture this income reality of Albertans.
Using these increases, Calgary would raise approximately $1 billion in income tax, sufficient to cover the residential portion of the property tax revenue at $996 million.
Saving Families Money
Under this 2021 scenario, every family with a median income and a home with a median assessment would save hundreds, if not thousands of property tax dollars per year.
For example, a family in Upper Mount Royal making $196,000 a year living in a home worth approximately $1.42 million in 2021 would save $2,894 per year.
A family in Saddle Ridge with a family income of $104,000 in a home worth $348,000 would save $1,039 per year.
A family living in an apartment in Mission worth approximately $193,250 in 2021 with a median household income of $72,000 would save $791.56 per year.
From Saddle Ridge to Upper Mount Royal, families save money. The savings are found in the difference between the property tax bill the family no longer has to pay and the additional income tax a family pays under this new scenario.
What About Renters?
Property taxes are a part of your rent. The landlord doesn’t pay their own taxes, the tenants do. This is true for tenants of all types, including businesses. Even though you don’t own the property and don’t benefit from the equity being generated, landlords pass the tax on to you. That’s part of the trade-offs of signing a lease – and I’m not fighting that here.
But with the appropriate legislation from the provincial government, the property tax savings should be transferred to the renter in the same way the landlord transferred the costs.
Imagine a $150 per month property tax bill eliminated on an apartment, that is $150 off someone’s rent. That’s a $2,000 rental dropping to $1850. Or a $1,500 studio dropping to $1350 per month.
Calgary is losing its affordable edge; this could be how we get it back.
As long as the province protects renters’ rights in this process.
No plans to change the tax regime in Alberta
The province has signaled that it has no plans to reduce the burdens it is downloading onto municipal governments. Education property tax is skyrocketing. A poorly funded poverty and harm reduction strategy has pushed people in crisis onto city streets. And the solution to most of these problems, good jobs and good homes, continues to be pushed to municipalities to handle.
It is increasingly unlikely that the province will start taking more responsibility following years of offloading it to cities.
Which means that for Calgary to better afford the responsibilities it has been given, we need a new system of revenue.
Property tax punishes people with the lowest income in our society. A municipal income tax can cover municipal bills, save money for almost every family across the City, and will give the municipality access to a funding source that ebbs and flows naturally with economic and population growth.
A modern city needs modern revenue tools, and the province could give them to us.
It’s time to end property taxes.
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To read the full report: Click here
