Cut taxes and come up with a clear plan: A Calgary clarion call by W. Brett Wilson
'I love my Calgary. It’s one of the most attractive cities in the world'
Two years into the economic downturn, the question many are asking has changed.
It's no longer, "When is the economy going to turn around?" It's now, "what's the road ahead?"
The historical model of impatiently waiting for the good times to roll again is no longer a realistic way forward. Our current unsettled circumstances require bold new thinking and action that must drive a Calgary renaissance.
Calgary renaissance?
Over the years, I have been critical of government-led economic diversification schemes.
Attempts to make us less hydrocarbon-dependent and attract completely new sectors to Alberta have allowed governments to try to hand-pick corporate winners and losers, and unfairly subsidize certain sectors.
Rarely, if ever, have these efforts (under any political party) produced the hoped-for results.
Simply put, we have spent far too much time and money trying to artificially diversify our economy, rather than recognizing and embracing excellence — and growing our skills, knowledge and competitiveness in our many existing "resource" industries. Our western provinces are rich in resources — think energy, farming, timber, uranium, ranching, hydro-electricity, fishing, agri-feeds, potash, coal, base and precious metals, diamonds and indeed, our people.
We need not look over the fence at what others have. We need to embrace, celebrate, understand, optimize and grow the vast resources we are already blessed with.
Rather than trying to engineer a diversification process for Calgary, why not create clarity and certainty around our municipal and provincial business policies such that we are able to simply attract businesses from a variety of sectors, and help existing businesses prosper?
Clarity and certainty is, unfortunately, not something we have seen from any level of government in Alberta over the last long while.
Downtown cash cows
Twice in the last decade, we've undergone royalty reviews, which have created massive levels of uncertainty. We've recently imposed a new carbon tax which, rather than being revenue-neutral, has the net effect of increasing the overall tax burden on businesses and individuals.
New minimum wages are a setback to our critical hospitality industry. And we now have the prospect of a looming City of Calgary property tax hike that will negatively affect existing businesses, and sharply discourage entrepreneurship in our city.
For decades, the city treated downtown corporate tenants as cash cows.
Now, with vast vacancies in our office towers, the city has looked for ways to increase taxes on businesses outside the core. For the next year, the city has said it will cap its increase on property taxes at five per cent instead of 30 per cent.
My question is this: why cap the increase for only one year? Why not five years? And why a cap on tax increases? Rather, why not consider a business tax abatement — reducing taxes on businesses, or exempting businesses from certain taxes all together?
A more favourable tax structure is exactly what is needed to attract much-needed new businesses to this city and support those existing businesses that are already struggling. The city must learn to do more with less — not shift the burden of its inability to manage costs onto the backs of small and medium businesses — the true backbone of our economy.
The case for tax abatement
At the moment, all levels of government are clawing at operating margins — making it harder to do business, not easier.
The best appeal we can make to business is to offer a five-year tax abatement to seed an entrepreneurial renaissance in Calgary. Tax abatements are regularly offered to special civic projects in order to attract investment and innovation (I believe there are such abatements for businesses in the East Village, for instance).
Thirty years ago, in an effort to attract new investment, Austin, Texas dramatically overhauled how it taxed businesses. Today, Austin is a growing centre of entrepreneurship and economic diversity.
Why can't Calgary follow a similar path?
The entrepreneurial environment
The more an entrepreneurial environment is nurtured, the more business can do what they do best — find new solutions to old problems, attract investment, create employment and sustainably grow.
Rather than being confident, small businesses are rightly concerned about looming tax hikes and increasing business costs, whether in the form of property tax hikes, utility rates or the ill-conceived jump in minimum wages.
Clearly these measures are dampening our city's entrepreneurial spirit at exactly the wrong time.
In the US, Trump (whom I do NOT respect) is touting significant tax reductions, including significantly cutting corporate tax rates. To now compete and attract investment north of the border, we must offer a policy-environment that is equally pro-business.
A five-year tax abatement is a good place to start.
Of course, a tax abatement would require a commensurate reduction in spending by city council — which would likewise be a good thing. Reigning in spending, contracting out or deferring certain projects is a responsible thing to do in volatile economic times, and it would ensure tax abatements are a realistic option to bridge us to another day.
Calgary 2.0
Bold approaches like a five-year tax abatement are exactly what's needed to enable individual entrepreneurs and small businesses to do what they do best — create value, innovate and help build Calgary 2.0.
With one of the youngest, most educated, and most skilled workforces in the world, a tax abatement would help turn the Calgary of 2022 into an entrepreneurial mecca and help Calgary reclaim its place as a primary economic engine of Canada. If Calgary is indeed at a crossroads, the opportunity is before us to take the road less traveled — the road of lower taxes and reduced spending — one that leads to renewed prosperity through entrepreneurial growth.
I love my Calgary. It's one of the most attractive cities in the world. Creating a more business-friendly tax environment would only make it more so.
Calgary:The Road Ahead is CBC Calgary's special focus on our city as it passes through the crucible of the downturn: the challenges we face, and the possible solutions as we explore what kind of Calgary we want to create. Have an idea? Email us at [email protected]