City already a leader in business tax incentives
By COLLIN GALLANT on November 28, 2019.
cgallant@medicinehatnews.com@CollinGallant The province plans to expand its package of property tax abatement programs that cities can access to attract new industry, but in an area where Medicine Hat likes to boast that it’s already a leader. The machinery & equipment levy can be charged by cities or counties on large plants and oil and gas infrastructure as part of property tax regime, though Medicine Hat has exempted the assessment class for decades as a nod to business. On Wednesday, Municipal Affairs Minister Kaycee Madu introduced a bill that would allow those that do collect the levy to offer breaks of up to 15 years to new or existing businesses in efforts to grow the economy. “It empowers them to offer the longest tax incentives in North America,” said Madu, after introducing the bill in the legislature. “We are making sure that in this depression economy that we’re sending a message to investors that we are open for business.” This summer the governing United Conservatives introduced and passed Bill 7, which allowed cities, towns and counties the ability to offer companies general property tax breaks. Madu said the new measure builds on that and was requested by the municipalities he’s met with, including leaders at this month’s Rural Municipalities Association convention. However, local governments have the ability to chose whether to apply the equipment tax or a general business tax on major industrial facilities. Coun. Phil Turnbull said the city has always found it “counterproductive” to charge a tax on the means by which companies conduct business. He felt more study was needed of the issue before the city could form an opinion on the legislation. It’s not immediately clear who across the province does use the levy. In the southeast, Redcliff does, but immediately reduces the assessed value to 40 per cent, thereby lowering the eventual tax bill. Cypress County also applied a mill rate to its machinery assessment base, valued at $858 million in 2018. That brought in $4.7 million in tax revenue for the county that year. Medicine Hat’s machinery assessment was $360 million in 2018, but no mill rate was applied, meaning the charge is zero. Major plants in Medicine Hat only pay taxes on portions of their sites considered as commercial use, or essentially office space. “As always municipalities get to decide how to use these tools,” said Madu. Administrators stated that the province-wide value of machinery assessment was $85 billion, and about 80 per cent of that related to designated industrial properties, such as chemical plants or oil facilities. Earlier this year, the previous government updated the Municipal Government Act to allow cities to determine costs of cleaning up contaminated, hard to redevelop, brownfield sites, and offer an off-setting discount on property taxes over five years. Medicine Hat council has held hearing and passed two bylaws related to the brownfield incentive. Madu was unaware of any local council to employ the general tax incentive brought in during the summer. 20-19
