July 20th, 2024

Canadian Federation of Independent Business sees disparities in tax rates

By Theodora MacLeod - Lethbridge Herald Local Journalism Initiative Reporter on February 17, 2024.

A report from the Canadian Federation of Independent Business (CFIB) has revealed disparities between property tax rates for businesses in some Alberta municipalities as compared to tax rates of residential properties.

In their report, the CFIB considers the fairness of these taxation imbalances.

Coming in fourth on the list of highest tax rate ratios under only Calgary, Canmore, and Edmonton, the study found that Lethbridge businesses pay a rate 2.58 times that of residential property owners, resulting in a tax rate 2.11 per cent for businesses versus 0.82 per cent for residential properties.

Bradlee Whidden, policy analyst for CFIB says this rate of taxation is having concerning and negative impacts on small businesses.

“The reason why it is particularly damaging to small businesses is that they have to pay that regardless of if they are making revenue. To be quite frank, many small businesses aren’t making a lot of revenue right now due to all the challenges their facing in the form of inflation, rising interest rates, lower consumer demand.”

The report also reveals that while 75 per cent of properties in Lethbridge are zoned as residential, it is the 19 per cent which are business properties that make up 38 per cent of municipal tax revenue. Noted in the data compiled by the CFIB is that six per cent of properties in Lethbridge do not fall into the categories of business or residential. Of the 20 municipalities included in the study, Lethbridge has the highest business tax rate. The residential tax rate ranking the fourth highest.

Whidden explains that when costs rise for businesses, it is often consumers that are forced to pay. “What our data does show is that as a result of rising property taxes across Alberta over the last couple years, businesses are being forced to raise prices, they’re being forced to forgo expansion, and this damages the local economy. These are the cornerstone of our local communities.”

With small businesses accounting for three quarters of Alberta’s private sector employment, Whidden says the increase to property tax costs could have widespread impact.

He explains the rate of business property tax “has gotten worse over that last five years and we predict that that will continue to get worse over the next few years.” He adds that many small businesses have had to consider the future of their establishments due to the rising costs.

In the end, Whidden stresses that, “small businesses are the cornerstone of our local economy, and we need to ensure that governments implement policies that allow them to survive and thrive.”

When queried, the City of Lethbridge stated, “We have just received the information and will need time to review the report to provide feedback.”

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Property taxes for small business are a tax deduction. Not so for homeowners living in their homes. Also they have other deductions homeowners r not eligible for. This must be part of any conversation on tax rates and/or increases.

Guy Lethbridge

Tax deduction does not mean free… we still have to pay , the city gets all of it. Also , I’m just speaking for myself, but we also have a house in Lethbridge. So we are paying tax for that as well.

Don’t word it like we are getting away with something. Small business is an important part of our economy.