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Alberta government announces property tax incentives for municipalities

June 5, 2019

It’s no secret that Alberta’s municipalities are the leaders in economic development - it’s what they do, it’s their primary priority. So AUMA appreciates that the provincial government intends to clarify and enhance property tax incentive tools so municipalities have more options to attract & retain businesses in their communities.

Bill 7 proposes to expand provisions in Alberta’s Municipal Government Act (MGA) to enable municipalities to offer multi-year property tax exemptions for non-residential properties. Such provisions are being implemented to help develop brownfields in Medicine Hat, which may serve as a model.

Currently, section 347 of the MGA allows a municipality to cancel, refund, or defer a tax on any property, but those provisions are intended for when municipalities want to offer relief to businesses or organizations who are facing financial hardship. Despite that, some municipalities have used these provisions to incent new business development, but the legislation is not clear on how long it can be offered. Bill 7 proposes to amend the MGA to prescribe that municipalities can partially or fully exempt or defer property taxes for a non-residential property for up to fifteen years. While municipalities can already offer multi-year tax exemptions to brownfield properties, Bill 7 will now limit those exemptions to a maximum of fifteen years.

Bill 7 also outlines a new process to implement a property tax exemption, which involves council passing a bylaw that establishes the criteria for eligibility such as the types of businesses or geographic areas that are eligible, the time period, and the amount of the exemption. Eligible businesses can then apply to the municipality. Municipalities’ primary revenue source is property taxes, which are used to pay for the services residents & businesses rely on. When considering property tax incentives, municipal leaders must be vigilant in how they apply them to ensure all local rate payers are treated equitably.

AUMA notes that the province's education tax remains a part of their municipal property taxes. As important partners with the province, municipalities will continue to collect the education tax on behalf of the government. AUMA appreciates the province’s efforts to offer an additional taxation tool for municipalities and for continuing to respect the principle of local autonomy in how municipalities choose to use those tools.