Home May 2019 Toeing the Tax Line: Property Taxes and the Appeal of the Outskirts

Toeing the Tax Line: Property Taxes and the Appeal of the Outskirts

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Terry O'Flynn.

While ICE District looms large in our minds and skyline, some of the area’s biggest commercial developments are actually happening on the outskirts, just outside of the tax jurisdiction.

Both the new Amazon fulfillment centre and the Premium Outlet Mall by the city’s international airport represent continued success just beyond the city’s borders. What a lost opportunity for our city. In both cases, the locations were chosen strategically: be close to Edmonton, but not too close.

It’s no secret that Edmonton’s property tax rates are becoming burdensome for businesses. Rising at four times the rate of inflation, these taxes have been called “the Edmonton Disadvantage” by councillor Mike Nickel. Coupled with slow permitting and other issues, many companies are finding it easier to deal with smaller municipalities who can offer competitive taxation, less red tape and more flexibility.

If Edmonton was losing business to the outskirts only recently, this would be a different story. It would be one of surprise and considering new efforts to be competitive. This is not the case.

The city has classically done more business on its fringes instead its downtown. This isn’t a unique situation amongst prairie cities with similar industries, where space needed for warehousing and machinery make downtown operations impossible. Despite this being an ongoing issue, one the city has long been aware of, we are still losing to other places. Even as ICE District builds up the downtown, and consequently the City’s coffers, many major businesses are literally toeing the line. They come close enough for the benefits and far enough away to save time and money.

Edmonton needs to consider what it can offer these businesses and any others that want to take advantage of this city’s highly-skilled, educated workforce and its many other benefits. The city also must recognize that driving old and new businesses to the outskirts means less money for its budget, projects and citizens.

Taxes, at the end of the day, are a calculation based on supply and demand. Do you raise taxes and lower demand or do you lower taxes in the hopes of increased supply? In short, do you hope to make less money off of more businesses or more money off of fewer? If Amazon and the Premium Outlet Mall are any indication, it’s that Edmonton is hoping to charge fewer businesses more – but if that’s the plan, it’s not working (just look at what’s happening in Calgary right now).

Edmonton’s tax rate and permits, influence, in part, how a business develops, but it also controls that business’ geography. While the call for lower taxes is simpler, Edmonton and its residents should be asking if its current tax rate is helping businesses develop or negatively impacting their growth. Taxes, after all, are an important part of a city. Edmonton’s taxation and regulations should protect its citizens while fostering this city’s famous entrepreneurial spirit.

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