MEDICINE HAT, AB -- A proposed new bill in the provincial legislature would help Alberta municipalities attract businesses through tax breaks.
Although Mayor Ted Clugston supports the bill, he's wary about what it could entail.
Bill 7 allows council's to give businesses tax breaks for up to 15 years in order to attract them into the community.
The bill would allow municipalities to defer or cancel taxes for any business or industry they want to attract to their area.
A city could tailor the incentive to their own specific needs as well, it just needs to create a bylaw outlining the initiative.
Medicine Hat has already implemented the 'Brownfield Tax Incentive' bylaw in April that involved similar powers under the NDP. It was put in place in order to sell 603 1st Street and the old Medicine Hat Arena.
“I actually gave credit to the previous government, the NDP credit, for the Brownfield Incentive and allowing us to do that,” says Mayor Ted Clugston. “We were I think the first municipality to take advantage of that with a bylaw and try to incentivize to move those lots.”
Mayor Ted Clugston say he's supportive of the bill, but it could be unfair to businesses who are already in the city.
“There could be some new business that everybody wants, well then everybody’s racing to the bottom with tax incentives, and lower and subsidize, subsidize, subsidize,” says Clugston. “It comes to the point where is it fair to the present business owners for some new business to get a tax break.”
He adds it could create serious regional competition.
“Everybody’s going to give so much incentive that ‘oh you’re going to give me one million dollars, Red Deer’s going to give me 1.5, oh well Lethbridge is going to give 2’ and then all of a sudden that actually hurts our existing tax base because they have to make up the difference.”
Clugston believes Medicine Hat already has an edge over other cities though. Since it’s a smaller population, many new businesses wouldn’t have competition.
“Well Aurora doesn’t have any competition in Medicine Hat, they were the first of their kind, so I could see us doing an incentive for a business that doesn’t presently have a competitor in Medicine Hat,” he says.
He says he can’t see council giving out incentives left and right, especially because Medicine Hat is already in a good spot.
“Now there will be people who say ‘well of course you should be bringing business to town and doing everything you can to attract them’ and I would say we have a pretty good record of doing exactly that without this,” he says.
British Columbia and Saskatchewan have similar programs. B.C allows tax breaks for up to 10 years, while Saskatchewan allows them up to five.
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