Are Morinville businesses paying enough taxes?
by Ed Cowley, freelancer
Businesses are not paying high enough taxes in Morinville. In the past five years, that slogan has been chanted by numerous politicians and town bureaucrats over and over. By constantly repeating it in the council echo chamber it sounds more truthful now than when town officials started making decisions based on slogans rather than analysis and contrary information is ignored. For example, at the Sept. 13 council meeting, the businesses are paying enough was repeated a number of times, however, within half an hour of those proclamations council was reviewing a proposed policy to offer incentives to attract commercial and industrial development. At that point, council was told that business and multi-family residential properties create revenue for the town while single-family residential are a net cost to the town.
To get down to the question at hand: Are businesses paying too little for industrial and commercial property taxes? That’s a judgment call because what is too little in one person’s mind is too high for another, but here are some simple facts that even council appears not to know (unless they are finding it convenient to bury them).
1 – The property tax rate for business and industrial properties is now 10% higher than the residential tax rate, with a town goal of incrementally increasing it to 50% higher than the residential rate.
2 – Commercial and industrial properties have a higher assessment than residential. For example, expect a home assessed at $400,000 in the single-family residential assessment category to be assessed at $500,000 if that same structure was used for business purposes and assessed as commercial. So business pays 25% extra as a result of the higher assessment.
3 – The town adds a $231 tax* on every business in a commercial building in town. That tax is called the business license. By charging individual businesses, a commercial property with two businesses operating would generate an extra $462 (rather than a single charge for one property) annually, escalating the revenue to the town for multiple businesses on a single property. The business license adds very little value for businesses. The town cites promotional benefits for licensed businesses but in August one councillor voiced concern that the town itself was purchasing from suppliers outside the town without contacting local businesses—the explanation was that administration did not know what the local business offered.
4 – The Stormwater Service charge on the monthly utility bill is actually a tax. No one applies for the stormwater service and no one can have it disconnected—it’s like calling the sidewalks a utility and charging taxpayers a monthly fee. The town has a couple of reasons for disguising stormwater service as a utility. First, it generates lots of revenue without anyone complaining about a huge increase in taxes, an obvious benefit to politicians and administration. And by calling it a utility all of the revenue it generates gets shuffled directly into the Stormwater Service reserve account. The town 2022 budget shows a utility surplus planned at $2.39 million but doesn’t break down the amount from each of the defined utilities (however 4,000 accounts on the tax roll would produce $480,000 in revenue and with businesses paying double it takes the total to well over half a million.
So here’s the rundown on extra ‘tax’ costs paid by business and industry relative to residential:
Property tax rate 10% higher in 2022 than residential; assessment formula (controlled by provincial regulation) much higher for commercial than residential but I conservatively estimate adding 25%. Take this 35% direct increase on the municipal tax bill then add $231 annually for a Business License and another $120 business surcharge ($240 compared to $120 for residential) for Stormwater Service.
So are commercial and industrial properties contributing enough revenue to the town of Morinville compared to residential? That’s for you to decide. Below is what the Morinville administration reported in writing to council on Sept. 13. [The town uses “non-residential” as a term to refer to all commercial and industrial properties.]
“Morinville currently has a disproportionate amount of residential development. Single-family residential development is a net cost for the Town. High-density residential developments can provide benefits to Town finances and local businesses. Increased non-residential development key to the long-term financial viability of the Town.”
Publisher’s note – * Non-resident business licences are $231