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Yes, your property taxes really are soaring

Appeared in the Calgary Herald
Authors:
Release Date: October 5, 2013

It's not your imagination. Your property taxes really are shooting higher.

For those who haven't paid attention to their property tax bill until recently, let me offer some calculations: Had the city and province stuck to inflation-only increases starting in 2007, a homeowner with a $2,500 property tax bill in 2006 would see a $2,858 bill this year. Instead, the charge will be $3,430, or an extra $572. The cumulative effect over seven years is an extra $1,538.

Or ponder a home with a $3,500 property tax bill in 2006. Had it been subject to inflation-only increases since 2007, that property would receive a bill this year for $4,001. Instead, the bill is $4,802, an $801 difference this year and $2,100 more over seven years.

Water, drainage and wastewater fees have also jumped way above annual inflation over seven years. Annual increases ranged from 3.9 to 21.3 per cent, depending on the year and item. This year, drainage, water and wastewater fees will jump by 4.9, 7.5 and 13.5 per cent respectively.

Thus, when Mayor Naheed Nenshi recently downplayed the rise in property taxes over the past several years, he acted as expected for someone whose "currency" is amassing votes: While businesses seek profit, politicians seek votes. Those involved in the latter will seek to maximize their "profit" every bit as much as those in the former.

Downplaying the tax hikes is thus good politics. But as someone once said, everyone is entitled to their own opinion; they're not entitled to their own facts.

Fact is, since 2007, and in recent years, Calgary's property taxes have risen substantially and way above inflation in most years (2007 was the last and lone exception).

This year happens to be the worst, with the city's hike in property taxes at 13.1 per cent, compared to an estimated inflation rate of 1.4 per cent (the latter figure from Statistics Canada). Thus, city hall's portion of the property tax increase is forecast to be nine times the Statistics Canada rate of inflation for Calgary.

The excuse from city hall, including the mayor on occasion, is that the jump in property tax is occasionally offset by a reduction in property taxes imposed by the province. (Your property tax bill has two components, with the city's share at 56 per cent and the province's at 44 per cent, and the province dropped their hit this year.)

The province has indeed been kinder to homeowners some years, but that is small comfort. It is anyway irrelevant, given how city hall has snatched away any provincial reductions. The mayor's defence is akin to some provincial politician who might argue their out-of-control spending is justified and affordable because the federal government reduced the GST a few years back.

Whenever the media raise this issue of above-inflation hikes, the mayor and much of council justify such hikes as ostensibly necessary because of above-inflation increases in spending. They point to how the city's expenses "typically increase at a higher rate than goods and services considered in consumer or household inflation."

In justifying this faster-than-consumer-spending rate of expenditure growth, the city conveniently calculates its own internal high inflation rate for expenses. Most years, those city-created inflation numbers are wildly higher than Statistics Canada's version.

Calgary's actual inflation rate, according to Statistics Canada, ranged between a high of just 2.2 per cent in 2011, with the low being a small dip in prices in the recession of 2009. In contrast, with the exception of 2007, the city's annual, self-created cost of doing business was double, triple or quadruple the Statistics Canada consumer price index.

Even if one wanted to buy the codswallop that the city's own manufactured inflation rate is somehow justified, this on the excuse that the city's costs cannot be controlled by city politicians, property tax increases even then were higher than the city's own self-induced inflation rate most years.

In 2009, city hall inflation was 1.8 per cent, while the property tax increase courtesy of city council was 5.3 per cent. In 2010, the rates were 4.1 per cent and 4.8 per cent, respectively. In 2011, the city said its costs increased by 3.2 per cent; it hiked property taxes by 10.4 per cent.

In 2012, city hall inflation was 3.7 per cent; the city's property tax hike was 5.1 per cent. In 2013, the city pegs its internal cost increase at 3.3 per cent. The city portion of your property tax bill is up by 13.1 per cent.

Those are the facts. The rest is opinion.

Calgary property tax increases 2007-2013 v. Statistics Canada inflation
 Municipal Price IndexConsumer Price Index for CalgaryMunicipal property tax increases
20074.75.14.0
20085.93.24.5
20091.8-0.15.3
20104.10.84.79
20113.22.210.4
20123.71.05.1
20133.31.413.1
 Source: City of CalgarySource: Statistics CanadaSource: City of Calgary


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