It’s no secret businesses across Alberta are struggling. In many cases, Edmonton businesses are no exception. Both employers and employees have been dealt a series of tough hands.
Edmonton’s economy slowed in 2016 and job losses (particularly in lower-paying jobs) became a reality for many. Although office vacancies aren’t nearly as bad a problem as they are in nearby Calgary, office space sits unused in Edmonton, with the office market vacancy rate at 11.9 per cent. Commercial and industrial property values in Edmonton had decreased by 4.9 per cent as of July 2016, compared to a year earlier.
Business insolvencies are also up. In the second quarter of 2016, business insolvencies were up 13 per cent over where they were in the second quarter of 2015, according to the city’s economic insights.
During tough economic times, taxpayers look to their government to lead by example. While small businesses and families are chipping away at their spending to make ends meet, they should expect their politicians to do the same.
Forty-two per cent of Edmontonians said they are not receiving good value for the city taxes they pay, with only 31 per cent in favour, according to an October 2016 Mainstreet Research poll.
The other side of the tax equation is spending. Paying taxes isn’t such a bother when taxpayers can see their money is being spent responsibly, in a way that delivers value for dollars. That same Mainstreet Research poll showed city spending was identified by the largest share of respondents as their top issue going into the next municipal election.
Spending at the city level has been unsustainable for quite some time. According to a December 2016 report by the Canadian Federation of Independent Business, Edmonton exceeds a reasonable level of spending by 2.18 times. Over the last decade, real operating spending in Edmonton increased by 70 per cent while population growth increased by only 32 per cent.
It’s right there on the City of Edmonton’s website that “Edmonton strives to ensure a business-friendly tax environment without compromising the quality of infrastructure and services that support business and its workforce needs.”
Because nothing screams “business friendly” like new taxes, right?
Alongside Calgary Mayor Naheed Nenshi, Edmonton Mayor Don Iveson is continuing to ask the provincial government for increased tax powers that could make Edmonton a more expensive place to do business.
As finance minister, Joe Ceci has overseen the imposition of the province’s multibillion-dollar carbon tax, a 20 per cent business tax hike, an income tax hike, a train fuel tax hike and beer tax hikes. Now he has taken over the city charters file for the provincial government. It would be unsurprising to find business owners shaking in their boots.
If the goal is truly to create a business-friendly environment, giving entrepreneurs and job creators a much-needed break, then new city tax powers are the wrong direction for Edmonton.
It’s time for the mayor to rub the dollar signs from his eyes and halt his ask for new tax powers. Instead, city council should get with reality and offer long-term tax relief by making meaningful spending reductions. Then they can say with confidence that Edmonton truly is business friendly.
Paige MacPherson is Alberta director of the Canadian Taxpayers Federation.