Why no leading mayoral candidates promise to cut taxes

A central issue in Calgary's election campaign has been citizen frustration with rising property taxes but none of the leading mayoral candidates are actually promising to reduce taxes.

Rather, the three front-runners are all promising to limit tax increases,with varying degrees of specifity.

Here's where theystand on the issue.

Bill Smith

Bill Smith has made taxation a key part of his campaign strategy but isn't promising to cut taxes.

His official platformbegins by saying "we've seen our property taxes skyrocket by 51 per cent" over the past seven years, which isn't actually true when you look at total municipal tax revenue per capita.

Between 2010 and 2017, the increase was actually 39per cent in absolute dollars and 24 per cent in inflation-adjusted dollars.

Smith also says in his platform thatthe property taxes on his own business have increased by 70 per cent over that same time frame and he wants to see the tax burden on business reduced.

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How exactly?

His platform devotes three words of explanation: "Reining in taxes."

In a recent interview,Smith elaborated, saying it would be a slow process.

"One of the things that we have to be careful of is we're not making a promise to bring taxes down right away, and we're not making a promise to cut taxes," he told theCalgary Eyeopener.

"We want to maintain where we're at right now and stop overburdening."

Naheed Nenshi

The incumbent mayor makes "keeping your taxes low" one of six pillars of his official platform.

He notes that taxes on a typical home in Calgary are lower than most major cities in Canada (but doesn't mention that utility fees are on the higher end) and says "we need to do more" to keep it that way.

How, exactly?

"Over the next four years, we must continue to cut red tape, review all city businesses units to create efficiencies, and make it easier to do business in Calgary," Nenshi says.

His platform doesn't include atargeted limit for residential taxes but he does pledge to extend the five-per-cent capon tax increases for businesses that the city adopted in January for one year only.

Using $45 million from city reserves, the cap was meant to assist mostly suburban businesses that were facing major increases on their tax bills due to changes in their property assessments relative to those in the downtown core, where assessments (and therefore tax bills) plunged, particularly in the office sector.

"I support extending this relief program for another year which will allow more time for the downtown core to recover," Nenshisays.

Andre Chabot

Of the three, Andre Chabot makes the most specific and aggressive promises for tax limitation and reform in his official platform, including a hard cap on tax increases, in general.

"I pledge that I will not increase property taxes greater than inflation," Chabot says.

He also says he would "never vote in favour" of taking any "tax room" left by the province a quirk of the property tax system that occurs when the education portion of the bill comes in lower than anticipated.

Chabot is also calling for a fundamental change in the way the city taxes small businesses, which are bearing a greater portion of the tax burden since the downturn in oil prices and the surge in office vacancy rates downtown.

He wants to create different tax categories for different types of businesses in order to mitigate sudden swings in property tax bills.

"What this means to small business owners is that during tough economic times their incremental tax burden would be lessened regardless of what occurs in non-residential sectors," he says.

"They would not see a huge increase year over year which they are currently experiencing."

Why is no one pledging to cut taxes?

The main reason is that it would be unfeasible to reduce taxes given the way the city handles and talks about its budget.

Unlike other levels of government, municipalities in Alberta can't run deficits, so council determines ahead of time each year how much tax revenue it needs and then sets a property tax rate that will yield that amount based on the assessed value of all the properties in the city.

Tax increases are then reported relative to the previous year.

This differs from the provincial and federal governments, which take in most of their revenue on the fly as a percentage of economic activity through mechanisms like income taxes and sales taxes.

As population grows,incomes rise and sales increase, the higher levels of government collect larger amounts of tax revenue without actually "raising taxes" that is, the percentage you pay on yourincome or your purchases.

It's theoretically possible for the provincial or federal government to cut taxes and still take in more revenue than theydid the year before, in absolute dollars, if economic activity grows at a greater rate.

But for the municipal government, tax cuts would mean less tax revenue, which would be difficult to manage in a city with agrowing populationthat is subject to inflation, contractual wage increases and other financial pressures.

It would likely mean significant cuts to city services or increases inuser fees such as transit passes, water service, garbage collection, and so on.

It's all something to keep in mind for election day, which is Oct. 16.

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