Proposed new provincial legislation that would allow local municipalities to offer businesses tax breaks up to 15 years in length could end up pitting municipalities against each other, says Mountain View County reeve Bruce Beattie.
The Municipal Government Property Tax Incentives Amendment Act (Bill 7) was tabled in the legislature on June 4.
“I’m not a big fan of those types of arrangements,” said Beattie. “It gives some flexibility to municipalities, but it sets up a competitive nature amongst all our Alberta municipalities on who can lower their taxes the most to attract business.
“It pits one municipality against another. Who can lower our tax rates the most? Those municipalities that don’t have deep pockets wouldn’t be in a position to offer those types of relief.”
Giving tax relief to one group would place additional financial burdens on other taxpayers, he said.
“The expenses are going to stay the same,” he said. “We don’t collect taxes just to collect taxes. We collect taxes to provide services.
“I think there are lots of folks who have houses or are taxpayers in the towns would appreciate that (tax relief) as well.”
Bill 7 reads, in part, that, “a council may by bylaw, for the purpose of encouraging the development or revitalization of non-residential properties for the general benefit of the municipality, provide for full or partial exemptions from taxation for non-residential property or deferrals of the collection of tax on non-residential property.”
The bylaw passed by the local municipality “must set criteria to be met for non-residential property to qualify for an exemption or deferral, must establish a process for submission and consideration of applications for exemption or deferral and must not provide for an exemption or deferral to have effect in respect of a property for more than 15 consecutive taxation years.”
Where a municipality grants or cancels an exemption or deferral in respect of designated industrial property, the municipality must notify the provincial assessor and provide any other information requested by the provincial assessor respecting the exemption, deferral or cancellation.
Kaycee Madu is the provincial minister of Municipal Affairs.
“This legislation would empower municipalities to attract investment, create jobs and realize their full economic potential,” said Madu.
“Municipalities deserve the freedom and opportunity to make the choices that fit them best. I look forward to seeing this legislation bolster investment and economic development across our great province.”
Al Kemmere is the president of the Rural Municipalities of Alberta and a Mountain View County councillor.
“I’ll be honest, I have mixed feelings on Bill 7,” said Kemmere. “I think there are some good opportunities in it possibly to have some tools to encourage economic development.
“There may be some tremendous opportunity in this for innovative ideas moving forward that you can attract to your area and enhance your community and not necessarily compete with other businesses.”
As far as concerns with the legislation, Kemmere said, “I am concerned that the risk is you are going to drill the mill rate down and race to the bottom. Municipality against municipality competition is what it creates.
“You have to be cognizant that you have businesses within your community that have been there for many, many years, so to give preferential treatment to newcomers is not always a strong piece of good and fair business.”
For his part, Reeve Beattie said it would be up to council to decide how to proceed should requests come forward for exemptions or deferrals under the legislation, should it pass.
“Of course it would be up to council to make those kinds of decisions,” he said. “You have to sit down and see what are the pros and cons.
“Council would have to weigh the cost of giving up that tax revenue to cover off the cost of providing services to those businesses.
“It would have to be done in a sense of a partnership and understanding that there will be a point at which time that company will be successful and will be able to make up that lost tax revenue.”
Under Bill 7 an applicant would be able to file an appeal to the Court of Queen’s Bench within 60 days of being turned down for an exemption or deferral by a municipality.
