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Chamber presents to Council on high business taxes

(Last Updated On: Oct 19, 2019)

by Colin Smith

Morinville businesses are paying $368,681 more in property tax this year than in 2018 according to the Chamber of Commerce, which is calling for a re-examination of business taxation.

Morinville and District Chamber of Commerce made a presentation outlining its concerns to Town Council at its October 15 Committee Of The Whole meeting. The Chamber also submitted an issue statement signed by more than 40 business operators.

In 2019 Morinville adopted a split mill rate for non-residential property, so that commercial and industrial property owners pay at a higher rate than residential property owners. For a number of years Morinville had taxed both at the same rate, and in 2018 was the major only municipality in Alberta to do so.

The rate for 2019 was set at 1:1.1, so that businesses are paying 1.1 times the tax of homeowners. That rate is set to rise to 1:1.2 in 2020, and subsequently each year until 2023 when it will be 1:1.5.

In 2019, non-residential assessment value increased by 17.52 per cent, a major change from the 2.05 per cent decrease in 2018. The residential assessment value fell by 1.53 in 2019.

The combined result was a 35.71 per cent increase in the amount of non-residential tax owing.

In its submission, the Chamber called on the Town of Morinville to rethink the application of split mill rates and undertake consultations with the business community to review property tax policy.

One recommendation it puts forward is capping total non-residential municipal tax changes at 14 per cent annually.

The Chamber is also seeking a review of the procedures for calculating assessment values and changes to the process so that Council can make use of assessment information in a timely manner. It would also like to see non-residential property tax based on a four-year average of assessments, to protect businesses from large increases based on annual assessments.

Another recommendation is to generate more tax revenue by prioritizing investment attraction and new business development rather than through the split mill rate.

The move to a split mill rate is in line with a Long Term Tax Strategy for the Town developed by the Administration last year and approved by Council.

The rationale for the policy change was that charging the same mill rate for both classes of property is out of line with other Alberta municipalities, which generally charge a considerably higher rate for non-residential.

According to a strategy planning document, splitting the rates, resulting in higher tax payments for non-residential property owners, will help ensure that Morinville’s finances are sustainable and that challenges such as inflation growth, service demands and the cost of the multipurpose recreation facility project can be met.

Statistics contained in a recent report on Alberta’s tax rates by the Canadian Federation of Independent Business (CFIB) show that in 2018 Morinville was the only municipality with a population of more than 5,000 that taxed residential and non-residential property at the same rate.

The province-wide differential averages out to 1:2.49, while for the 13 Capital Region municipalities the average is 1:1.76.

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