Businesses throughout Drumheller may soon see an end to their annual business tax.
At their meeting on January 14, Drumheller Town Council defeated a motion to established the business tax rate for 2013 and directed administration to come up with alternatives to generate the same amount of revenue.
The proposal presented at the February 11 meeting of Town Council was to replace the business tax by collecting the same revenue from the non-residential property tax. In effect, the Town would be revenue neutral with the change.
“This seems to be just a change in mechanism from something archaic to one that is more common. With things being revenue neutral, it’s quite likely in many cases, business owners will still be paying a similar amount, it’ll just reach them in a different way,” said Councillor Andrew Berdahl.
The decision to seek alternatives to replace the business tax was made after surveying other communities and finding none subscribed to the tax. In addition, the Town is aiming to eliminate noncompliance in regards to the tax.
“We did a poll of any community our size or larger and we found Calgary is phasing out their business tax, Edmonton and Red Deer have a section which is for revitalization of the business areas. No other communities our size have a business tax,” said Bill Wulff, acting director of Corporate Services.
“Currently, the business owner is getting charged the value of the business tax. However, there is $23,000 (27 per cent noncompliance) outstanding that we cannot collect, because the buildings aren’t owner occupied and we can’t apply the outstanding tax to them.”
Councillor Jay Garbutt agreed it was time to make the change.
“With 27 per cent noncompliance, it behooves us to do something to make it easier to collect these outstanding fees,” said Garbutt.
With the proposal, non-residential property owners would make up the difference.
“The downside is, if we add the revenue to commercial property taxes, the property will probably transfer the difference to their renter or, if the building is unoccupied, will have to pay themselves,” said Wulff.
The business tax was charged to business owners in Drumheller and was calculated as a percentage of the property assessment for the building it occupied.
A motion to direct administration to collect the revenue through the non-residential assessment was passed 5-1 by Council, with Councillor Lisa Hansen-Zacharuk opposed.
