Media Release

Calgary has the most unfair tax system; Edmonton charges the highest taxes on business
July 03, 2008

Calgary/Edmonton – In the week where property tax bills have come due in Alberta municipalities, a new study from the Canadian Federation of Independent Business (CFIB) finds that the property tax system is placing an unfair burden on small- and medium-sized businesses in most Alberta municipalities.

The research report, titled Property Tax Fairness in Alberta: Small Businesses Pay More Than Their Fair Share, examines the difference between commercial and residential property tax rates in municipalities across the province. When commercial mill rates are higher than residential mill rates, this results in what CFIB calls a Property Tax Fairness Gap (see backgrounder for more detail).

In 2007, among 18 major cities in Alberta, the tax gap is highest in Calgary: Commercial property owners pay $5.07 for every dollar in property taxes paid by residential property owners. Meanwhile, Edmonton charges the highest commercial property taxes, at $1,825 for every $100,000 in assessed value of property.

“Municipal leaders often justify high levels of spending by saying it is what their residents want,” said Danielle Smith, CFIB’s Alberta Director. “But in many communities, residents are being heavily subsidized by local businesses. It’s the local restaurant, hair salon and mechanic who are paying far more than their fair share.”

Property tax is not income sensitive – business owners have to pay it whether they are profitable or not – which makes high tax levels particularly harmful for Alberta firms, many of which are struggling with escalating costs for rent, energy, labour and materials. When property tax levels get too high, businesses may consider relocating to other communities with lower taxes. Maintaining a balance in the tax structure is the best way for a municipality to ensure a growing, vibrant business sector.

“When you see a huge tax gap in some of these communities, it suggests that municipal councils don’t believe residents are willing to pay the full cost for all the services they receive,” said Smith. “If that’s the case, there is only one solution: municipalities should trim their spending and close the gap.”

CFIB represents 10,000 small-and medium-sized businesses in Alberta, and has 105,000 members across Canada. To arrange an interview with DANIELLE SMITH or JANINE HALBESMA please contact Barb Currie at (780) 421-4253 or Brian Gordon at (403) 444-9290.

The full study is available at www.cfib.ca.