High taxes deter small businesses in the rural hamlets

Connect Council – Public Letter

By JANE STROUD, Ward 4 Councillor of Regional Municipality of Wood Buffalo

Councillor Jane Stroud

A major concern in the rural is that the local businesses face a heavy tax burden due to the provincial restrictions on mill rate flexibility for municipalities. The current provincial rules require hamlet businesses to pay the same rates as the industrial oil corporations.

This rate is 4.67 times higher than the urban local businesses.  For example, if your business tax in Fort McMurray is $10,000, in the rural area it is $46,700 for a property with the same assessment. We need local businesses within these hamlets.

This tax burden stifles any growth or sustainability. Conklin residents have to drive over 100 kilometers to get fresh groceries.  The rate of taxes and the freight is very costly, to build and sustain a grocery store within this hamlet. In Fort Chipewyan, they have a store and the cost of a four litre of milk is $16.39.

We have a grocery store in Anzac who also has the high cost of taxes and freight. The Anzac grocery store keeps their cost down to remain competitive. With the added business from the contractors on Highway 881, the store was able to sustain itself. However with the down turn in oil prices, and the reduction of contractors, it has led to a 50 per cent loss in sales. With the added burden of high taxes, it has put the store in an unsustainable situation.

Rolie Gloge, an owner of the Zee Bar in Anzac, has lost approximately 60 per cent of business due to the reduction in contractors with the down turn in oil prices. The business direct costs/expenses should be at maximum 68 per cent of net income. The Zee Bar at present is at 75 per cent. If the rural municipal taxes were similar to the urban rate, it would decrease the expenses and be closer to 68 per cent of net income.

However, at the present time with the downturn, these lots are not selling and the owners are left with very high tax bills. While this may ultimately means lower market value assessments – and taxes in the meantime – the tax bills remain high.

Commercial lots in Conklin have received a dramatic increase in taxes due to the influx of oil companies in the area increasing the market value of properties which is the basis for their annual assessment.

However, at the present time with the downturn, these lots are not selling and the owners are left with very high tax bills. While this may ultimately means lower market value assessments – and taxes in the meantime – the tax bills remain high.

Mayor and Council have lobbied the provincial government in different ways to seek another classification for local rural businesses. Members of Council met with the Honorable Minister of Municipal Affairs on February 11 in Fort McMurray. The topic of rural taxation for local businesses was a top priority.

Councillor Jane Stroud, center, with Municipal Affairs Minister Danielle Larivee (left) and Mayor Melissa Blake (right) on February 11. Members of Council met with Stroud to discuss rural taxation and other agendas of top priority. SUPPLIED PHOTO

Councillor Jane Stroud, center, with Municipal Affairs Minister Danielle Larivee (left) and Mayor Melissa Blake (right) on February 11. Members of Council met with Stroud to discuss rural taxation and other agendas of top priority. SUPPLIED PHOTO

In August of 2015, Council passed a motion to have the provincial Order in Council, which created our Regional Municipality, changed to allow for lower non-residential taxes in the hamlets.  The Order in Council is a much quicker way to change the tax rate. In the discussion this last week, it appears that the provincial government is waiting for the changes in the Municipal Government Act, which we feel is not necessary.  My concern is that it might be too late for some of the small businesses. In speaking to one business owner, he is dreading June when the tax bills come out.

Local rural businesses and I have met with MLA Tany Yao in recent weeks discussing the taxes and asking to lobby in the Legislature. Mayor and a number of Councillors also met with the Leader of the Wildrose party, Brian Jean to gain support. The Métis groups within Fort McMurray and the rural hamlets met with the Honorable Minister of Aboriginal Affairs, Kathleen Ganley citing this concern. The Honorable Finance Minister Joe Ceci and the Honorable Minister David Eggan have also been made aware.

Council also passed a resolution in October of 2012, which was forwarded to the Alberta Association of Municipal Districts and Counties (AAMDC). The resolution specifically asked that the province either amend the Municipal Government Act or create regulations to enable the creation of sub-classes within the rural non-residential tax category. At the AAMDC meeting represented by Mayors and Councillors from all over Alberta, the resolution passed with 93 per cent in favour.

It appears this is a rural problem throughout Alberta.  Other provinces – such as Saskatchewan and Ontario – have flexibility in their taxation classifications, allowing municipalities to decide how their taxes should be distributed amongst taxpayers. We need to see this happen in Alberta.

Jane Stroud is a RMWB Councillor for Ward 4, and has submitted an open letter to the public as part of Connect Weekly’s Connecting Council feature. On behalf of the Mayor and Council, more letters will be published on a weekly basis. Councillor Stroud can be reached by email at stroud@rmwb.ca or by phone at 780-334-0516.

– Connect Weekly-