Property tax and minimum wage hikes squeezing fragile Calgary retailers
Calgary retailers have had a bad year, to say the least. Sales were down 3.8 per cent year over year as of March as laid-off employees have trimmed expenses and those worried about prospective layoffs have sat on their wallets. With an estimated 20,000 fewer employees in the downtown core, there isn’t as much business to go around as there used to be. Many restaurants that were busy when the economy was humming along are now eerily quiet. The challenges facing Calgary businesses will be compounded as governments impose higher costs on businesses.
The first notable recent cost increase comes in the form of property tax increases. Non-residential property taxes are up 3.8 per cent in 2016 when considering the combined impact of municipal and provincial portions. Of course, that average isn’t felt uniformly across the board, since it depends on assessment values, so while it might be tolerable for some businesses, it might be catastrophic for others.
The second is the scheduled increase of the minimum wage to $15 per hour by 2018. Some businesses will be able to survive the 47 per cent increase to the minimum wage by increasing prices or reducing staff hours. Others may simply be unable to keep their doors open. Restaurants will likely be hit disproportionately hard, since they employ many young, inexperienced workers who do not yet have sufficient skills and training to command a premium in the labour market. Ironically, some people currently working at or applying for minimum wage jobs may indeed be hurt rather than helped by the increase due to less opportunities or decreased hours offered as employers adjust to higher costs.
Of course, these new costs come in addition to increases to personal and corporate income taxes that will also impact business owners. Given the economic challenges facing the retail sector right now, adding additional costs is problematic.
Alberta’s provincial and municipal governments need to recognize the province’s current economic realities. Higher costs in the face of reduced consumer demand puts significant pressure on retailers. Some will be squeezed out of business altogether. That is bad news for Calgary’s economy and quality of life.
Subscribe to the Fraser Institute
Get the latest news from the Fraser Institute on the latest research studies, news and events.