FCS2011-25

Date: November 7, 2011

Title: FCS2011-25, BUSINESS TAX CONSOLIDATION

Background Information:

Calgary levies two taxes on commercial/industrial properties and business premises – the nonresidential property tax and the business tax. Responding to Council direction, Administration investigated the potential consolidation of The City of Calgary’s business tax revenues with nonresidential property taxes. The investigation found that the rationale for levying the business tax no longer exists for Calgary. Moving from a dual to a single tax environment would enhance Calgary’s economic competitiveness and attractiveness, and would improve efficiency in the administration of Calgary’s municipal tax system. Consolidation would mean changes for nonresidential property taxpayers, and associated issues and implications are discussed in this report. The City of Edmonton recently consolidated their business tax with the non-residential property tax, and experienced no significant issues. Calgary is now Alberta’s last remaining municipality, and will soon be one of three Canadian jurisdictions, that levies a business tax. Administration concludes The City of Calgary should initiate in 2013 a process that would culminate with the elimination of Calgary’s business tax. This would mean the consolidation of business tax revenues with the non-residential property tax, based on an approach that would be revenue neutral to The City of Calgary, with benefits and savings, where possible, being extended to non-residential property taxpayers, and culminating in the elimination of the business tax.

Motions:

ADOPT, Moved by Alderman G. Lowe, Seconded by Alderman D. Colley-Urquhart, that the SPC on Finance and Corporate Services Recommendations contained in Report FCS2011-25 be adopted, as follows:

That Council:

1. Initiate a process to develop a business tax consolidation framework with the goal of starting in the 2013 taxation year, including an implementation and transition time frame of up to 10 years that would culminate with the consolidation of all business tax revenues into the non-residential property tax, and Calgary’s business tax eliminated; and

2. Direct Administration to prepare a report, guided by Council’s principles established through NM2011-20 at the 2011 July 04 meeting of Council, and including provision for key stakeholder input of key issues raised during the public presentations to the SPC on Finance and Corporate Services at the 2011 October 05 Regular Meeting and report back through the SPC on Finance and Corporate Services no later than 2012 March, with recommendations on:

(a) an implementation plan and transition time frame,

(b) the customer and implementation issues identified in this report,