Faced with escalating costs, including huge business property tax hikes, Calgary’s small business community has rallied to fight back in a tax revolt the likes of which the city has never seen.
Hundreds of small business owners gathered on the steps of City Hall early Monday morning prior to city council holding an emergency debate over the controversial issue. Later, council voted unanimously to cut spending and deliver rebates that would effectively chop 10 per cent from the non-residential property tax – council voted unanimously to cut $60 million from the city’s budget and to direct $70.9 million towards business rebates.
“The 10 per cent commercial property tax cut seems to me to be a reactionary and ineffective measure that goes nowhere to acknowledge and deal with the real problem with how property taxes are allocated and applied and just kicks the can down the road again. Calgary risks being perceived as a business unfriendly jurisdiction as this mess rolls out in the media and online. Our civic leaders need to sort this out in an equitable and timely manner and help our City get its entrepreneurial mojo back,” said Michael Kehoe, broker/owner with Fairfield Commercial Real Estate who attended the rally.
“We’re hearing that Calgary has lost its competitiveness. Retailers are under pressure in a soft economy with rising costs such as property taxes and it’s really affecting their bottom line and their competitiveness.”
If the problem doesn’t get fixed, Kehoe said it will lead to some small business closures, while other stores will be under pressure to save costs by taking measures such as laying off staff.
“There is a tax revolt happening in the business community in Calgary. People are really upset and their voices are being heard by council,” said Kehoe. “Council’s under pressure to find a solution and I think the small business community is finally mobilizing to fight back to the city councillors, who have not performed. They basically killed the goose that laid the golden egg in our retail and our food service community in Calgary.”
Richard Truscott, Alberta director of the Canadian Federation of Independent Business, said the organization has been hearing a lot of frustration and a lot of anger from the small business community and Calgary’s city council has lit a fuse.
“They’ve done this to themselves and push has come to shove and finally small business owners are pushing back,” said Truscott.
“They’re really disgusted by the fact that small businesses in this city continue to be treated like a cash cow by the mayor and council and it’s got to stop. Finally council has woken up and they’re going to do something about the emergency, about the crisis, but they must do something about the longer term issue here which is the fundamental unfairness for small business in Calgary that pay four to four and a half times more than residents based on the same assessed value of property. The system needs to be made a lot more fair for small businesses. No question about it. And the time is now.”
Truscott said there have been many issues that have affected small business in the past few years from all levels of government.
Is this the worst level of anger and frustration he’s seen directed at a government?
“The only other time I’ve seen this frustration and anger was a couple of years ago when the federal government tried to change the tax rules on small business and pull the rug out from under their feet. This is something. I’ve never seen this at the municipal level,” he said.
“If this issue doesn’t get fixed, Calgary’s going to erode the tax base. Council and mayor will rue the day that they didn’t do something to rebalance the system. To make it more fair for small business. This has to happen. We’ve been telling council for years and years that this is a risky and unsustainable strategy to squeeze small business so hard in this city to pay for the ever rising cost of city government And it’s got to stop. Hopefully today this is the beginning of the end of treating small businesses like a cash cow in the city.”
Truscott said he was relieved to see Council do what it had to do to stop the bleeding – for now.
“But slapping on bigger and bigger band-aids is not a long-term solution. What’s truly needed is major surgery to make sure the property tax system stops negatively impacting the health of small business,” he said.
“I am pleased to see Council finally act, even it was a last-minute Hail Mary pass. Calgary’s independent business owners are sick of being treated like a cash cow. Moving forward, it’s crucial the mayor and Council focus on major reform to the property tax system to make it a lot more fair for small business.”
Kristi Stuart, a co-founder of Barre Belle and one of the organizers of Monday’s small business rally, said she’s worried about what’s happening with small businesses in Calgary.
“I’m gutted every day. Over the past week I’ve received an email or a message from someone who has had to shut their business in the last six months or will have to shut it in the next few months due to high property taxes. It’s not fair,” she said. “Entrepreneurs are the hardest working people I know. They put everything on the line. They should not be forced to close their businesses due to taxes.”
Jill Belland, co-founder of Barre Belle, said the current tax burden is not a sustainable environment for small businesses to survive.
“Long term we need to look at those ratios in terms of non-residential properties and residential properties and who is paying what,” said Belland.
Kelly Doody, founder of Social School, who was facing a hefty tax hike and an organizer of the rally, said the rally was held because people are fighting to save local business and want to continue to see entrepreneurs thrive in Calgary.
“We have all experienced what’s happening and we know how important small business entrepreneurship is to this city. We have 55,000 small business owners in this city,” Doody told the rally earlier in the day.
Michael Going, owner of Good Earth Cafes, said business people focus on their customers and their business and meanwhile take “these hits over time, and it’s like death by a thousand cuts but this one is taking the feet out from underneath us.”
“We’ve seen increases of 300 per cent for some of our stores here in Calgary and we just can’t sustain that,” Going told the rally.
“Business can’t carry the burden that we have. There has to be a reallocation to residential taxes. Politicians have to have the courage to make that reallocation.”
Mike Blayney, with RE/MAX Complete Commercial, said he attended the rally to support the city’s small business community.
“I’ve been a commercial realtor. I’m frustrated with what’s happening out there. I see a lot of lives being shattered due to the high taxes both on the tenant side having to absorb these huge taxes and the landlord side having to reduce rents to compensate for the high taxes. So it’s time we all stood up,” he said.
“Now with what’s happening the tax has pretty much taken up the portion that used to go to the owner and there’s really no more incentive for the owners to carry on. Without profit, there’s no business.”