Calgary's small businesses struggle with rising property taxes

As city council debates the size of this year's property tax increase, many small business owners worry their property tax bill will continue to balloon.

City will no longer offer one-time tax relief to companies

Kelly Doody is co-founder of The Social School, which helps entrepreneurs and businesses navigate the ever-evolving world of digital communication. She says in her Calgary tax bill went from $16,000 to $72,000 this year. (Heather Saitz/Press + Post)

As city council debates the size of this year's property tax increase, many small business owners worry their tax bills will continue to balloon.

John Milino, co-owner of Alberta Storage Place in Calgary's southeast, says his business tax bill has tripled over the past four years to over $100,000 annually.

"We've had to tighten our belts. We do a lot of the work ourselves now," he said. "On a day like today, I'm gonna be going back to to the storage and and I'm going to be doing the snow removal."

He says the property tax increases have forced him to raise the company's storage rates by $10 more each month, and they'll most likely have to go up again.

"You do everything you possibly can and you're up against an expense line item you have zero control over," the business owner told the Calgary Eyeopener on Tuesday.

"It's survival and it's tough because it's compounded by the fact of the whole economic situation within the city."

"I went on Kijiji and there's seven garages in people's homes that they're renting out, so not only am I competing against the multinational storage facilities, I'm competing against people who are just trying to make ends meet."

Milino says council and city managers are in denial about how bad the financial situation is in Calgary and that there is too much misspending at city hall.
"There is all these Band-Aid issues around giving subsidies and relief for businesses. The bottom line is there is a complete disregard or misunderstanding of the economic realities that this city and province are currently in. It's not an income issue, it's a spending problem."

'Bracing themselves'

Another small business owner, Kelly Doody, who is the CEO of the Social School in Inglewood, says her company is also bracing for bigger increases in business tax bills.

"We saw our building go from about $16,000 of tax last year in 2018 to $72,000 in 2019, and then we fought the assessed value and got it down to about $63,000 — which we found out about a month ago," she said.

Doody says that in order to fight the assessed amount, it cost her $7,000 and four months in appeal court. 

She also notes that unlike previous years, the city won't offer any one-time business tax relief for small businesses.

"I think it's more frustrating to be constantly told how small businesses caught a break on commercial property tax when that's just so far from the case," she said.

"You can't call 10 per cent of money returned that was overcharged by 300 or 400 per cent really relief."

Doody says she hopes the assessment system is overhauled, and that the city reduces its spending.    

"There has to be a realistic look at spending for sure in the budget and that is not up to us to control the city's $4.5-billion budget," she said. 

"I would assume they could do that in a realistic way without cutting front-line services of the most vulnerable."

Chamber reacts

The head of the Calgary Chamber of Commerce is looking for long-term solutions for business owners. The decline in property values downtown has resulted in a shift in the tax burden on business properties outside the core.

For the past three years, council has given business property owners a rebate on their taxes, but that won't happen this year.

Chamber CEO Sandip Lalli says council needs to shift some more of the tax burden from non-residential accounts to homeowners so there's real tax relief for business.

She says Calgary businesses need long-term answers to their questions on tax costs.

"You're not providing me any of that. I'm going to make my own decisions based on what you're doing here and what you're doing here is putting me in a corner to say, 'Do I continue to employ people and continue with my business or do I double down and say my growth is elsewhere?'" Lalli said.

The debate on Tuesday is one step in the budget process, with further debates to come on whether to shift more of the tax burden onto individuals in order to relieve businesses that have been hit hard by falling property values in the downtown core. 

On that note, however, the city says decreases in tax revenue from the core have stabilized and it's projecting the share of tax revenue from the downtown office towers to increase slightly in 2020.

With files fromDrew Anderson and the Calgary Eyeopener.