Home March 2019 “The Edmonton Disadvantage”

“The Edmonton Disadvantage”

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Terry O'Flynn.

Last year, Councillor Mike Nickel described Edmonton’s skyrocketing commercial property taxes as “the Edmonton disadvantage.” Rates have increased four times faster than inflation, causing issues for local businesses of every size, from giant operations to the smaller shops that we use every day.

Property taxes get very complicated quickly, but this simple fact remains: commercial property tax rates have risen roughly 6 per cent in eight years, from about 15.5 per cent to about 21.2 per cent.

Let’s put that in real dollar amounts. A property assessed at $400,000 in 2010 would pay $6,223.52. If that property’s assessment price rose with the provincial CPI, it would be worth $452,700, and the owner would be paying $9,605.71. So, when you take into account inflation on assessment values, business tax rates in Edmonton have risen 54.35 per cent.

Comparatively, residential property taxes have risen by a scant 1.3 per cent over the same period of time, despite representing 94 per cent of all taxable properties in the city. That same property, if residential, would pay $2,939.48 in 2010 and $3,932.56 in 2018.

It’s no secret that Edmonton’s economy has been in a slump for at least four years. Businesses are having a difficult time making ends meet without astronomical tax hikes. Economic instability, distrust, wage stagnation and a volatile real estate market are also making bills harder to pay for everyone in town. Property taxes should not be an added issue, especially at a rate that far outpaces what people are managing to get back as the economy recovers.

While many owners of large commercial properties have been eating the taxes instead of passing it onto their tenants; such large increases make such a decision untenable. The end result is that rents go up, businesses move or close and we lose parts of this city that make it such a unique and wonderful community.

To its credit, the City of Edmonton remains a very efficient machine – only 1 per cent of 2018’s Tax Revenue Budget went to governance (which oversees policies and practices to ensure continued sound fiscal management and long-term financial sustainability), but raising taxes runs counter to its longtime stance of attracting business. If, for example, another city has more reasonable property taxes and new infrastructure, why would it choose to move to Alberta’s capital? Even more alarming, businesses, like Amazon’s new fulfillment centre, are settling in the more business-friendly regions of our neighbouring counties; we are losing business to our literal next door neighbours.

Prosperity Edmonton, a collective of local business owners and operators, was formed last year to tackle this issue directly. In one letter to the City of Edmonton, they said the tax increases and other changes have “affected Edmonton’s competitiveness, small business confidence, attractiveness in national site selection, and overall employment.” It’s hard not to agree.

While corporate taxing is necessary to ensure Edmontonians have the things they need, they are a double-edged sword. Too low and the City would collapse. Too high and businesses leave, along with the money they pay, the jobs they create and the culture they help build.

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