Business ‘tax gap’ highest in Rockies

Jasper council took another hit from the Canadian Federation of Independent Business – this time for being the highest taxing of five towns in the Rocky Mountain corridor.

In a report released last week, the business lobby group said that in 2007, the tax gap – the difference between commercial and residential mill rates – is highest in Jasper.

According to the federation’s analysis, commercial property owners paid $6.50 for every dollar in property taxes paid by residential property owners.  The tax gap in Banff was 4.6; Canmore 2.55; Grande Cache 1.88 and Crowsnest Pass 1.26.

Grande Cache charges the highest commercial property taxes in the region, at $1,605 for every $100,000 in assessed value of property. Jasper was second with $1,528, followed by Banff at $1,106, Crowsnest Pass, $1,006. Canmore, at $612 per $100,000, was lowest.

The label is “disappointing” to Jasper town manager George Krefting, who said the ratio is what taxpayers voted for when the town was incorporated in 2001.

“The people of the town voted for a 70-30 commercial-residential tax split and the town has maintained that ratio,” Krefting said when the CFIB released its report. “The ratio now is actually 5.1 to 1.” 

“It’s disappointing; the report takes one small fact and doesn’t look at all the factors,” said Krefting.

But at least two Jasper hotels plan to appeal a 60 per cent assessment increase that pushed their taxes up by more than 20 per cent this year.

“When you see a huge tax gap in some of these communities, it suggests that municipal councils don’t believe residents are willing to pay the full cost for all the services they receive,” said Danielle Smith, the federation’s Alberta director.

“If that’s the case, there is only one solution: municipalities should trim their spending and close the gap.”

It’s the second time in a month that Jasper has come under fire from the business lobby group. The federation backed away from a charge that town administration’s spending was far in excess of population growth and inflation after a protest from Mayor Richard Ireland.

The latest province-wide survey revealed that the property tax system is placing an unfair burden on small- and medium-sized businesses in most Alberta municipalities, the federation said.

“Municipal leaders often justify high levels of spending by saying it is what their residents want,” said Danielle Smith, CFIB’s Alberta Director. “But in many communities, residents are being heavily subsidized by local businesses. It’s the local restaurant, hair salon and mechanic who are paying far more than their fair share.”

Property tax is not income sensitive – business owners have to pay it whether they are profitable or not – which makes high tax levels particularly harmful for Alberta firms, many of which are struggling with escalating costs for rent, energy, labour and materials. When property tax levels get too high, businesses may consider relocating to other communities with lower taxes, the federation warned. 

In response, Krefting said many businesses pay less than they did prior to Jasper’s incorporation in 2001 and that much of the spending on infrastructure is to accommodate thousands of tourists who visit every year. 

“Prior to the incorporation of the Municipality of Jasper Parks Canada provided a number of municipal functions.  Of the approximately $2.2 million collected in land rent at the time of incorporation, approximately $2 million was being collected from the Commercial property owners.

“The taxation model that has been adopted and approved does collect a share from the visitor.  And the way this is achieved is by charging a higher rate of taxation on business – who generate their income from the visitor,” Krefting wrote in an email to the Fitzhugh, and added that commercial rate payers can expense the municipal taxes they pay.

Referencing data from a provincial government website, Krefting said that Jasper’s 2007 non-residential tax rate at 15.282 is higher than the average of 12.189 for all Alberta Municipalities.

“However it should be noted that in 2007 more than 100 Alberta municipalities had commercial tax rates that are higher than the Municipality of Jasper,” he said.

Jasper’s non-residential tax rate for 2008 is 11.960.  Comparisons for 2008 tax rates are not yet posted on the Alberta Municipal Affairs Website, he said.

Because of the higher burden on commercial properties, Jasper’s residential rate is “very low,” Krefting said. “The 2007 rate is 2.351 compared to the average of 9.2991 for all Alberta municipalities.”