Creativity needed to keep tax incentive – Editorial

Off the Record

Messy business, this democracy thing.

At all levels, the fundamentals of democracy are visible and at play in Alberta today. From the health care debate in Alberta that is being driven by patients and their doctors, to the federal election call that was precipitated by a contempt of Parliament declaration by the Opposition, to businesspeople in Rimbey fighting town hall over removal of tax incentives, democracy is alive and well, if not a little battered.

It’s certainly easy for governments to make policy and enact laws but the real test of a government’s mettle is in defending those decisions to a gallery of iratepayers who come out of the woodwork when those decisions are considered to threaten their livelihood.

The affected businesses in Rimbey don’t care town council is doing what it feels is necessary to repeal a tax incentive bylaw believed to be ultra vires. It’s likely that most residents and businesspeople who did not benefit from the tax incentives were not aware council had such a bylaw on the books. It’s not a policy that was trumpeted annually, it was a carrot administration and the town’s economic development promoters would have dangled to encourage new businesses to establish in Rimbey or to coax existing businesses to expand or renovate — and in the end add valued assessment to the tax pool.

It might have been an easier bylaw to carry on the books during the boom when hotels, restaurants and new homes were springing up but today, when council is not blessed with huge year-over-year assessment increase to offset expenditures, removing tax breaks is a relative, if not shortsighted, no-brainer.

Certainly the previous council and town manager believed they were providing a legal incentive to businesses in the hopes of providing jobs and creating new assessment. That two law firms would disagree on whether the practice is illegal is not at all surprising. If a majority of councillors felt they had an option the practice of granting tax incentives could be supported by a learned legal opinion. That lawyers disagree is not surprising; there aren’t many billable hours in presenting an opinion that agrees with another lawyer.

If councillors feel it is in the best interests of the community to continue with some form of tax incentive, their creativity can make it happen.

Rimbey is not going to become a ghost town because the tax holiday is cancelled but if businesspeople have to pay thousands of dollars more in taxes over the next few years, it will certainly see fewer employment opportunities, reduced sponsorship of community events and sports teams, stalled expansion, and the relocation of some businesses to the rural area or back into residential basements.

If the tax incentive is indeed illegal and council needs to repeal the bylaw, then it needs to be fair in dealing with these business owners. A phased approach to cancellation or at least a year’s notice would seem to be in order. These businesses would have budgeted for the lower tax rate and to take it away without notice is irresponsible. That’s not to say residential taxes need to rise correspondingly; this is a burden that bust be carried on the commercial mill rate.

Council should have advised the business community of its intention before moving to cut the tax incentive and now they must endure the criticism and listen to the options that will be presented to them. If nothing else, council must give the appearance of listening to its constituents.

It can’t expect to be both right and popular in the community.