Most Calgarians thought talk of local budgets and property taxes had been put to rest, months ago.
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In that case, most Calgarians would be quite wrong, as a group of city councillors mounts a last-ditch effort to trim city spending to pare back an expected 7.8 per cent rise in property taxes in 2024.
Much of that increase is attributable to a shift in the tax burden from non-residential to residential property owners.
The latter had complained for years that they’d been burdened by an unfairly large share in recent years — and indeed, Calgary had been slowly drifting toward the maximum spread allowed by law between residential and non-residential taxpayers.
Calgary isn’t alone with its taxation challenges.
Toronto homeowners face a double-digit increase in property taxes this year.
The main issue is different there, however, with city leadership blaming higher orders of government for either downloading services or setting policies that are causing a strain on city services.
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While concern over city taxes is particularly intense this year, it reoccurs every year, often with the same worries and complaints repeatedly heard.
What if there was a better way than taxing residential properties for cities to get revenues?
Just because we’ve been doing things a certain way for hundreds of years doesn’t make it the best way.
Basing taxation on property values can be unfair to homeowners.
Most of them can’t set the value of their home or the land it sits on, and come assessment time, the numbers truly are out of their control.
The current system doesn’t care about who lives in the home or their ability to cover the cost of property taxes.
The most oft-cited example is that of a senior citizen on a fixed income who’s lived in the same home for years and now suddenly finds herself in a high-demand area where assessments are sure to rise.
This theoretical senior would have had no say about how things unfolded in the marketplace and yet, she might have to pay the price through her taxes even though she might not be able to afford it.
Meanwhile, taxation based on property values can be bad for cities as well.
The same forces that can strain homeowners can also cause issues for municipalities, with revenues partly tied to the mood of irrational markets.
It also has the potentially negative effect of encouraging quick and easy ways for cities to expand the tax base — greenfield suburban development, namely — even though doing so could make the city more expensive to operate over the long term despite the additional revenues being collected.
The inherent unfairness of residential property taxes has led to occasional calls for the regime to be revamped.
Some interesting ideas have been floating around about how cities and towns could replace property taxes with more equitable ways to generate the revenues they need.
It’s been suggested taxes could be paid annually based on the value of the initial transaction when the property was purchased. This could be further refined by escalating the amount paid over the years based on the change in the consumer price index, rather than being affected by sometimes wild, unpredictable market gyrations.
Meanwhile, others have put forward the notion of adding cities to the income tax system. The lesser one’s ability to pay, the less tax is paid.
Some have even suggested implementing a sales tax. While this can usually be a regressive sort of tax, such protections as those built into the national Goods and Service Tax could be implemented to shield those with low incomes from being saddled with an exaggerated tax bill.
Whatever options end up being weighed, we need to recognize properties don’t use city services — but people do.
We must come up with a fairer way to tax people while also ensuring cities get the funding they need to provide important municipal services.
rleong@postmedia.com
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