The Soapbox: Business Incentive Program has a glaring downside

Justin Crann
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There are positives and negatives to everything and Moose Jaw’s 2014 Business Incentive Program is no exception.

Justin Crann

At its heart, the program is meant to reward existing businesses for choosing to remain and expand in Moose Jaw while also appealing to outside businesses who are considering the Friendly City as a market.

The program discounts taxes on a decaying scale year-over-year for businesses that choose to renovate, expand, or build new property in Moose Jaw.

The scale grants exemption equal to 100 per cent of the assessed tax on new property for the first year, and drops by 20 per cent every year thereafter. The figures are the same on renovations.

By the sixth year, the owner of the property would be paying its full taxable value.

A tax incentive is a fantastic idea for luring new investment, and I would never entertain any other notion.

At Monday’s council meeting, Coun. Dawn Luhning argued the incentive is a bad idea because it creates an uneven playing field, but that’s just business.

Businesses that have positioned themselves well enough to take advantage of an incentive shouldn’t be prevented from doing so because others have not, and the program won’t necessarily exclude the latter group, either.

Those businesses that don’t have the funds to capitalize on the program now might find more ambition to start working toward growing themselves in the future if they see that there are meaningful rewards.

The fly in the ointment, however, is the extent of the tax exemption — particularly for new properties being constructed in city limits, and especially in a city that repeatedly complains about being cash-strapped.

Property taxes are important revenue for cities, and Moose Jaw is no exception: the money raised through that stream is then allocated to the city’s budgets to help fund infrastructure, among other items.

While this program doesn’t deprive the city of the revenues it already has, it effectively creates a situation where the city can’t grow its business property tax revenues for at least a year.

That situation is problematic considering the growing backlog of infrastructure work that has yet to be completed, plus the costs associated with it.

Although renovations aren’t likely to result in a terrible influx of new demand on the existing, aging infrastructure, constructing new properties when the infrastructure is already failing could create problems.

That the new properties won’t pay taxes to put toward their own infrastructure maintenance for the first year, and for less than half in the two years thereafter, is even worse.

Incentives can be fantastic, and I wouldn’t argue against a business property tax incentive that is reasonable.

Rewarding local businesses for staying and growing in Moose Jaw is a positive. Rewarding new businesses for choosing to come here is also a positive.

But the former’s rates should be superior to reflect their loyalty, and neither should have a 100 per cent tax exemption in the first year.

The city simply can’t afford it.

You can follow Justin Crann on Twitter or like him on Facebook.

Geographic location: Moose Jaw, Friendly

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