Business owners in the city might have read the Gazette’s front-page story on Wednesday with piqued interest and possibly a bit of trepidation.
City administration presented a report to committee of the whole looking at how St. Albert can work toward the goal of raising 30 per cent of its tax revenue from business.
This is not a new idea and city manager Patrick Draper was right when he said there is an interest by residents to achieve that mark, which would help lower residential taxes. St. Albert homeowners pay the highest amount of property tax in the region – averaging $4,293. Bringing that amount down will make the city more attractive to young families and seniors, which will in turn help growth.
Now most people assumed, and rightly so, that when the city targeted a 70/30 split between residential and commercial tax revenue it planned to achieve its goal through development.
That strategy, unfortunately, seems to be moving too slowly for city administration and a quicker alternative has been placed on the table.
Steve Bannerman, an appraiser with the city, told the committee it would take 40 years for the city to reach its taxation goals at the present level of growth and tax rate.
In response to this realization, administration is proposing cutting that time frame by increasing the tax burden on city businesses. Administration’s idea is to impose higher annual increases on businesses compared to residents. Considering the economic woes in Alberta, an increase in business taxes at the provincial level and rumblings of federal business tax increases – depending on who wins the election – it is hard to imagine why the city would even entertain such a notion.
What the city should be looking at is finding ways to encourage commercial growth by providing serviced land that is construction ready, an approval process that gives developers confidence, and a business atmosphere that will allow them to thrive. Completing Project 9 – expanding water and sewer services to South Riel – and twinning Ray Gibbon Drive are two key projects that will make this city more business friendly.
Part of this process is also ensuring a competitive tax rate. According to Guy Boston, economic development officer for the city, that should put St. Albert at the top of the list for developers. He told the committee the city has a lower non-residential tax rate than surrounding communities.
Either he misspoke or he has not checked tax rates in neighbouring communities lately. St. Albert’s non-residential tax rate currently sits at 13.9 mills. Compare that to Spruce Grove (11.12 mills), Leduc (11.45 mills), or Strathcona County (12.24 mills) and the illusion of the city’s competitive tax rate dissolves. We do have an advantage over Edmonton, which has a non-residential tax rate of a little more than 18 mills, but the capital’s customer base more than makes up for the discrepancy.
Coun. Sheena Hughes suggested administration look at what the city needs to do to encourage growth. We suggest taxes might be the real problem. Communities of comparable size in the region not only tax their businesses less, they tax their citizens less. That combination means those communities are attracting both businesses and their customers to call them home.
While it is commendable that the city is considering ways to reduce the tax burden on residents, increasing it on businesses seems like the old robbing Peter to pay Paul quick fix.
If the city is really serious about helping residents pay less, perhaps it should look at its own spending first. If neighbouring communities can succeed despite lower taxes all around, maybe we can too.
