Property taxes, tax base and tax rates. What do they mean and why do they matter? With property taxes due by June 30, City Budget deliberations starting this fall and recent media coverage, these are timely topics and part of an important conversation among the business community, City Council and, in fact, all Edmontonians. This is a conversation about the economic future of our city.
This is a conversation that must start with accurate data.
Number to remember: 36 per cent
The City of Edmonton collects residential and non-residential property taxes. With few exceptions, all property owners contribute to the property tax base. These taxes pay for more than half of the programs and services the City provides to residents—including roads, public transit, fire, police, libraries and recreation facilities. Yes, the City of Edmonton has over the last 10 years collected more in property taxes, but this increase also includes the growth of the tax base (construction of new homes and businesses), not just a tax increase.
It should also be noted that until 2011, Edmonton had a business tax that represented about a third of Edmonton’s non-residential tax revenue. Starting in 2008 that tax was phased out. This resulted in higher non-residential property tax increases, but those increases were offset by the removal of the business tax.
Characterizing tax increases that include growth and do not account for the business tax phase out is not accurate. The total municipal non-residential property tax increase has been 36 per cent since the removal of the business tax in 2011.
Number to remember: 2.8 per cent
It’s also important to know that tax rates can increase or decrease because of market fluctuations (housing and commercial property values) and are not representative of actual property tax increases. Tax rates should not be considered in isolation from market changes. When the market goes up, the tax rate can go down and vice versa. In 2017, Edmonton’s actual non-residential tax increase was 2.8 per cent.
Tax burden shifting
While it is true that the tax rate is higher for non-residential than residential, the overall tax burden has been shifting towards residential properties over the past 20 years. This is partially because of greater growth in the residential sector and partially because of tax policy decisions made by City Council. This table shows how the total tax burden has shifted over time.
Our city is also experiencing the challenge of aging infrastructure and unprecedented growth. This combination requires increased investment in maintaining and building the bridges, roads, transit and playgrounds residents use every day. We also need to continue to invest in transformative projects and infrastructure, including LRT and neighbourhood renewal. This investment will help strengthen and diversify the economy and local businesses, and help make Edmonton even more liveable.
We know the challenges residents and businesses face. As a City, we are focused on creating an environment in which all can grow and thrive. The City of Edmonton is conducting a comprehensive program and service review to find operating efficiencies and cost savings. The City is also about to embark on a rigorous budget planning process, and we invite all Edmontonians to take part.
Every budget process is a navigation of different needs and challenges. It’s City Council’s job to balance these needs and challenges to provide an exceptional quality of life for Edmontonians. As budget deliberations unfold, Council and Administration will be guided by a theme of economic sustainability.
Input from all Edmontonians is vital to the health and strength of our communities. We invite all Edmontonians to join in this important conversation or get more information.