Good afternoon your worship and members of council.

As mentioned, my name is Scott Hennig and I am the Alberta director of the Canadian Taxpayers Federation.

The Canadian Taxpayers Federation is a non-profit, non-partisan, advocacy organization, committed to lower taxes, less waste and more government accountability. 

We have 60,000 supporters nation-wide with 14,000 in Alberta, and roughly 2,000 here in Calgary. 

Probably to no surprise, our major concern in this budget is the size of the proposed tax increase of 25% over the next three years. 

Frankly, I’m not sure your timing could be worse. While there’s likely never a good time to hike taxes by up to 25%, with a recession occurring to our South, and a likely economic downturn to occur in Canada, Calgarians having less money in their pockets by way of higher property taxes, is not going to help ease any of the economic pain.

But, the good news for the City is that an economic downturn may make things like gas, wages and capital projects - cheaper, which should help the city.

But looking at the current rate of inflation of 3.7% for Calgary, which has been dropping for the past year, and is in all likelihood going to continue to fall once we get into 2009, the proposed 9.6% tax hike for this year alone is 2.6 times largers than the inflation rate. 

Now, we know that the basket of goods used to determine the inflation rate for Calgary, isn’t the same basket of goods purchased by the City of Calgary. 

But it very accurately reflects Calgarians ability to pay their taxes. In fact, the average weekly earnings of Albertans very closely mirrors the current inflation rate. So, it should be expected that on average Calgarians likely saw a 4% hike in their wages this year. That number however, will be smaller for most pensioners. In fact, a formula has been put in place to determine the wage adjustment each year for those seniors who receive CPP. The 2008 CPP increase amounted to 2%, and it’s likely the 2009 increase won’t be any higher. 

When pensions go up by 2% and Calgarians property taxes go up by 7 to 10% each year, seniors who are on very fixed income have to spend a smaller percentage of their income on things like food, shelter and clothing and a higher percentage on taxes. Many don’t have the ability to go back into the workforce and get a job again. • The same can be said for other low-income individuals, especially renters. When you hike property taxes by 25% landlords don’t eat those costs, landlords will turn around and pass on their tax hikes to their renters in the form of higher rent. 

If council is concerned about affordable housing, and it certainly appears many on council are, this tax hike is going to make housing less affordable. • The solution is to cap property taxes at the rate of inflation each year, meaning a tax hike of no more than 3.7% this year, and likely somewhere between 2.5 and 3% for the next two years. 

But a true tax cap would take both provincial and municipal buy in. I’ve brought with me today a copy of a report the Canadian Taxpayers Federation recently released outlining how a property tax cap would work, and how it would protect ratepayers from exorbitant increases. • I sincerely hope you consider endorsing this proposal. • But in the mean time, I hope you take immediate steps to reduce this tax hike and protect Calgarians now. 

We initially encouraged by news that came out late last week that suggested that by moving more of the ENMAX dividend into general revenues and not budgeting for EMS because the province was taking it over, you could drop this year’s tax hike from 9.6% to 6.8%. 

A nearly 3% drop without having to make any real cuts. • And frankly, that shouldn’t be much of a surprise. In fact, if the City of Calgary, as the sole shareholder in ENMAX demanded a higher dividend each year, there would be no need to hike taxes at all. 

Right now, the City collects a dividend equivalent to about 35% of ENMAX’s net earnings in 2007. This percentage has been as high as 43% in 2005 and as low as 21% in 2002. And it pales in comparison to the City of Edmonton dividend from their city owned power company, EPCOR, where the policy is to receive 60% of net earnings each year. For this year, this is over $130-million. 

If Calgary had the same policy, it would mean an additional $35-million this year in revenue, which would mean an additional reduction in the tax hike this year by 4.2 points, dropping it to a 2.6% tax hike for 2009, 2.4% for 2010 and 3% for 2011. • But I don’t want to suggest for a second that this should be done because the City of Calgary doesn’t have enough revenues. 

To steal a line about the province in the early 90’s: this government does not have a revenue problem, it has a spending problem. • According to the Canada West Foundation, real, per capita revenues in Calgary have grown by 19.2% since 1990, but real per capita spending has increased by 21.1% during the same period.

By: Scott Hennig
Posted: December 31, 2008
Topic: Alberta

Contact the regional director Scott Hennig for further information.

Type: Related

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