An excellent piece on taxation in Calgary appears on the re-election website for Gian-Carlo Carra, the incumbent candidate for Ward 9 on Calgary's City Council. It is the most thorough writing on the subject of assessment and taxation on any candidate's website that I have seen.
Mr. Carra states that "the appeals process is a source of significant problems for the City's Assessors", and that there is a "mini-industry of assessment lawyers who are the chief beneficiaries" of the complaints process. This perception is not only an incorrect understanding of the work that we as tax agents do, but seems to suggest that taxpayers should just "pay up and shut up" and stop bothering the assessors.
Our business as tax agents is in reviewing the assessments that our clients-- owners and occupants of commercial property such as office buildings, warehouses, and retail stores--and where it is deemed appropriate, appealing those assessment values to the Assessment Review Board. It is probably not well- and widely-understood that property taxes are a pass-through cost. That is, where a local business owner is an occupant of a strip mall, it is they who ultimately pay the property tax in addition to paying their agreed amount of rent. Quite apart from residential real estate rental, this is simply the way that commercial real estate is leased.
When our clients ask us to review an assessment for a property, it is with an eye to minimize the amount of tax that must be paid. There are few people who believe that citizens should pay no tax at all. There are equally few who want to pay more than their fair share. The Assessment Business Unit at the City understands this well. In their own mission statement, they declare that their intention is to "prepare fair and equitable assessments". Nobody wants to have to pay more than is fair and equitable.
I agree with Mr. Carra that the Assessment Business Unit does a very good job of assessing most properties. Of the thousands of commercial business and property assessments prepared in 2012, only a fraction had complaints filed. This speaks highly of their ability to reasonably and reliably estimate market values. However, theirs is not an easy task, and mistakes are made. In addition, valuing real estate is an imperfect process and opinions of value do differ. It is in these cases that we try to negotiate a reduction in the value or, if necessary, represent our client's interests at the Assessment Review Board.
The chief beneficiaries of this process are Calgarians. It is the people who own and work in the companies that drive this City's economic engine who benefit from ensuring that they are paying no more than their fair share. It is true that those in this industry--very few of us being lawyers--earn our living from this process, but it is unfair to state that we are the chief beneficiaries. That is like suggesting that City Councillors are the chief beneficiary of there being a City Council, since that is a key source of their income. A fair and equitable system of taxation benefits all citizens.
Mr. Carra also points out that market values are consistently below the actual market value as determined by sales. While I believe he is speaking specifically about residential real estate, the same can happen with commercial real estate, too. The ramifications of this are much more pronounced in the commercial sector. Where one business pays thousands or even hundreds of thousands of dollars less than their fair share, the taxation system is creating an undue competitive advantage over others in the same industry who are paying full value. A well-established principle in taxation law is that where any one taxpayer receives special treatment under the taxation system, then their peers are also due that same treatment. Part of our job as tax agents is identify circumstances in which our client is unfairly treated in comparison to their peers.
I agree with Mr. Carra that we seem to have as functional a system as the law allows. That does not make it unreasonable that taxpayers have a right to endeavour to minimize the taxes they pay by ensuring that their assessments are both fair and equitable with other assessments. Furthermore, those of us who work in this business and earn our livings from the process are not hustlers seeking to loot the City's purse. We believe that the work we do is valuable not only to our clients, but to all taxpayers.
We appreciate Mr. Carra bringing assessment and taxation up on his campaign website. It is a topic that we are obviously passionate about. We also wish luck to him and all of the candidates who are running for various positions in the October 21 municipal election. Each and every one deserves our praise and thanks for putting themselves forth in this vital democratic exercise.