Chamber calls on city to reduce tax burden on businesses through budget proposals

The Yellowknife Chamber of Commerce has laid out an array of ideas for council to consider to help ease the pain of businesses this year.

The chamber was one of the few organizations to provide feedback leading up to next week's city deliberations for Budget 2021. The business lobby organization sent a letter a letter to council on Nov. 20 and took part in a Zoom meeting on Nov. 24.  

In its written submission, the chamber came out against a city administration option to cut costs that would create a biennial paving or water/sewer program.

At the Nov. 2 governance and priorities meeting, city staff had proposed some strategies that council may consider to reduce the property tax rate and address workload pressures on staff. Among them included seeing major projects done every other year or for pavement and water and sewer projects to be done alternately every other year.

But the chamber described this as “not a reasonable measure.”

“Government infrastructure spending is an important economic driver, especially for local businesses who are typically awarded these contracts," states the letter to city hall. "In addition, research has found that deferring infrastructure maintenance can result in significant cost increases in the future and reduce the infrastructure’s life cycle by as much as one-third. We believe that essential services should always be a top priority during budget deliberations.”

The chamber is also asking the city to look at how businesses have gradually taken on a greater proportion of the tax burden over the last decade.  

"For example, in 2012 the mill rate ratio between commercial and residential property classes was 1.83 per cent and by 2020 the ratio was 2.26 – a 23.5 per cent increase," states the letter.

Zoom meeting

Much of Tuesday's Zoom meeting focused on the issue of seeking a better balance of the tax burden for small businesses.

Adrian Bell, a former councillor and broker and owner of Century 21 Prospect Realty, said small businesses have been carrying an increasingly heavy tax load. Council should identify ways to apply increases a little bit more fairly across the sectors, he suggested.

"It's up to council to decide what that fairness level is," Bell said. "In the past, the fairness (level) has disadvantaged small businesses. Reserve funds have been built up, and taxation has grown.

"Now we are at this point where it seems like there's a lot of money socked away for a rainy day. When business owners look outside their windows, it's raining pretty hard right now."

The chamber is also requesting that the city consider creating a budget policy that ensures that mill rate ratios – which are used to calculate property tax rates and are reported in May – are part of budget discussions and only changed after consultation with the business community "and that information about the property tax implications for each mill rate class is included in budget communications," reads the chamber's letter.

New small business mill rate class

The chamber is also asking the city to provide some tax relief options in alignment with the GNWT's Small Business Tax reduction and recommended the creation a new small business mill rate class.

"In Bonnyville, Alberta, a small business sub-class tax rate was created to provide small business owners with fewer than 50 full-time employees with an opportunity to qualify for reduced property taxes," the correspondence states. "In Montreal, Quebec, a reduced tax rate for commercial properties on their first $500,000 of value was introduced in the 2019 budget. This rate is 15 per cent lower than the general commercial rate."

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Reserve funds 

Finally, chamber members are asking for the city to strategically use its built-up reserves to help alleviate some of the financial challenges that businesses are confronting.

There is $10 million in reserves, which includes $2.4 million in the Revitalization Initiative Reserve and $877,000 in the Downtown Development Reserve, states the letter.

"One option could include preparing an investment package (tax incentives, land and financial contributions, etc.) that outlines how the city will contribute to the upcoming polytechnic university," states the letter.

The chamber is also asking council to create "an external finance committee" that would include public finance experts to address items such as growth at the city, operational efficiencies and saving measures.

Between Nov. 30-Dec. 3, council will review the 2021 budget before it is expected to be adopted on Dec. 7.