Progressive Property Taxation: The Right Approach to Addressing Calgary’s Municipal Fiscal Gap & Affordable Housing Crisis

This capstone investigates whether a targeted reform to Calgary’s existing property tax system could equitably address the city’s widening municipal fiscal gap and support long-term affordable housing investment. Specifically, it asks: how much extra revenue could progressive changes to the current property tax model generate for Calgary’s municipal government and its affordable housing initiatives? Access to affordable housing has become a growing concern in Calgary. Although the City has introduced several housing policies and initiatives, its widening fiscal gap directly constrains its ability to provide consistent and unconditional funding for affordable housing development. To mitigate this, the City seeks intergovernmental transfers from the federal and provincial government. These transfers present two issues for the City: (1) jurisdictional tension between the federal and provincial government results in political uncertainty that makes long term planning difficult, and (2) the conditionality of intergovernmental transfers limits the City’s flexibility to address local responsibilities. However, these intergovernmental transfers may not always be available, and the City does not have the fiscal capacity to unilaterally fund affordable housing development. The City could use property taxes to help fund affordable housing and address the municipal fiscal gap. Property taxes are the most stable form of revenue available to the City, but based on the ability to pay principle, it has been argued that wholesale increases in property taxes would impact lower valued residential property owners more than higher valued residential property owners. As such, it is likely that owners of lower valued residential properties do not have the fiscal capacity to take on further increases to their property taxes. The Town of Canmore’s Livability Tax signals that progressive property tax reforms – where full time residential owners pay less - are already emerging in Alberta. The question is no longer if change is coming, but rather which model will best advance equity and fiscal sustainability, while still allowing for investment/economic prosperity. To answer the research question, this capstone conducts a descriptive quantitative analysis of residential property assessment data from the City of Calgary. It covers data from 2014 to 2024 to estimate the total and average revenue generation potential of a progressive property tax model where different property tax rates are applied to homes valued within the following bands: $1 Million to $1.49 Million, $1.5 Million to $2 Million, and greater than $2 million. The findings indicate that the proposed model would generate $400 Million in 2024, whereas the current model generated $269.5 Million in 2024 before exemptions. That’s an additional $130.5 Million in revenue that could be used to fund affordable housing initiatives. This would fund approximately 2,040 new non-market housing units. If the proposed legislative amendments to Alberta’s Municipal Government Act are adopted, Calgary could implement a more equitable tax structure, address fiscal sustainability, and scale up affordable housing without placing burden on lower-income residential property owners.

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