Business will think twice about moving to St. Albert if non-residential taxes keep going up, say two city entrepreneurs.
Both spoke with the Gazette in response to city council hearing a first draft of the 2015 municipal budget on Monday. If approved, non-residential taxes, which include taxes paid by business, could go up by 3.5 per cent.
Lynn Carolei (Sublime Swim & Sunwear) and Mike Howes (DKC Sparklean) said that raising non-residential taxes could deter other business owners from moving here, or worse, lead existing ones to move someplace else.
“At some point it’s going to make it worth moving out of St. Albert,” said Howes. “I don’t think that it’s that much more right now to force anybody to leave but if they continue (to raise taxes) we will be losing business.”
Business pays for tax split
Howes said the city is trying to remove the burden on residential taxes but is doing so on the back of business owners.
City officials want to reduce the tax split between residential and non-residential taxes to an 80-20 percentage. But they didn’t just do so by bringing in more business dollars, he said.
While the number of businesses in the city has increased by a few per cent in recent years, the amount of taxes the existing ones pay has increased “by quite a few more per cent,” he said.
“So we are getting closer. But the thing that we are upset about as businesses is that we want to do that by bringing more businesses to town,” he said. “Not just increase the tax that the businesses that are already here are paying.”
Howes hopes that the city will soon be able to open the 700 acres of employment lands to new business investment. Those lands could attract millions in non-residential tax dollars, which would help reduce the tax split without having existing business pay more, he said.
“We need to push for more businesses to move to town,” he said.
Less attractive to business
Higher tax rates will also make the city less attractive to new business owners, said Lynn Carolei.
“Any time you have increases it makes it a little tougher for any business,” she said. “Even though I don’t pay the property taxes directly I do pay them through my rent.”
If rents go up business owners have to figure out how to recoup the expense, she said. That can lead to higher prices to the consumer, she said.
But it also makes a business less competitive compared to others in the region, she said. This will affect St. Albert’s ability to attract new business, she said.
“They are looking for business attraction and it doesn’t help if taxes are higher because we are already perceived as a high tax area,” she said.
Lynda Moffat, CEO and president of the St. Albert and District Chamber of Commerce said that the chamber is still waiting to see the results of the final budget deliberation expected in December.
But the chamber is always worried about increases to taxes for businesses, she said.
“Particularly in St. Albert where the residential taxes are very high, the city is always looking for ways to reduce that and of course the business tax is always there,” she said.
“We need to be vigilant and always be watching what is going on with the non-residential side.”
Guy Boston, executive director with St. Albert’s economic development team, said potential tax increases need to be viewed in a regional context.
St. Albert is very competitive with Edmonton and other neighbouring communities, he said.
Business in the city benefits from a large regional population and high disposable income. The city is also close to the Anthony Henday highway, which makes it easy to access.
All this makes the city attractive to business located here and moving here, he said.
He added that economic development is comparing the city with other communities and continues to ensure that the city is competitive in the region.
“It’s all I guess relative and we haven’t seen or haven’t noticed what the proposed tax increases are in the immediate area but it’s something that we certainly watch carefully,” he said.