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Experts suggest possible new taxes, fees to cut Calgary's reliance on property taxes

The city wouldn't have the power to introduce the new taxes unless the provincial government gave them the green light

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City council considered a long list of suggestions Monday about how to improve Calgary’s financial stability, including possible new taxes and fees so that property tax isn’t one of the only ways for the city to fund its services.

A team of external experts, assembled as a financial task force, presented 35 recommendations. The city called for their work as part of the its response to the property tax shift, which saw significant tax hikes fall on small businesses as skyrocketing downtown office vacancy drove property values down in the core.

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A little more than half of the city’s operating budget comes from property taxes. User fees make up the next largest piece of city revenue at about 33 per cent.

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The tax shift issue has seen the city spend close to $250 million to shelter businesses from untenable tax increases, and last year, they voted to change the way property taxes are split between businesses and homeowners, moving more of the burden to Calgary’s residential class. That meant taxes for Calgary homeowners went up even though council approved a freeze for 2020.

The financial task force report suggests that council consider a differentiated tax system to apply to organizations like Business Improvement Areas, non-profits and small businesses operated by an owner with limited financial means. It adds that new taxes could be considered, including ones targeting tourists and visitors who are using city services, small businesses based from home and e-commerce revenues that come from local activity.

Other areas where user fees or new charges could be introduced include for golf courses, billboard advertisements, e-scooters and ride-sharing apps such as Uber.

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But Mayor Naheed Nenshi said virtually none of the new taxes that have been suggested are within the city’s powers unless the province gives them the go-ahead to levy them.

“This really is a plea to the government of Alberta to say, ‘Let’s modernize how cities work,'” he said.

“The real big things in here, as I’ve said for many, many years, require meaningful tax reform. And that meaningful tax reform has to come from the provincial government.”

Council accepted the report Monday, but the vote doesn’t mean the city is taking any action now. City officials will return to brief councillors on the cost of making any moves and to seek approval to take further steps.

Council heard that the possible new taxes and fees were a list to potentially choose from to achieve an “improved mix of revenue.” Elected officials would have the final say on proceeding with any of them.

Coun. Jeromy Farkas said he wanted to see more ideas about cutting costs rather than new revenue streams.

“Calgarians need these new taxes like they need a hole in the head,” he said.

Nenshi said finding new revenue options isn’t about collecting more money, but part of finding a more flexible system to fund city services.

“Any dollar we get in new revenue sources we will spend a dollar less from property taxes, and we need to reduce our reliance on the unfair property tax,” he said. “In fact, that’s a very conservative thing, so I’m surprised that some members of my council seem to be so scared of it.”

masmith@postmedia.com

Twitter: @meksmith

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