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Calgary restaurant closes doors after successive property tax hikes

June 06, 2016
Calgary restaurant closes doors after successive property tax hikes

"Tax bill final straw — restaurant closing doors" ... that's a headline you never want to read.

It's awful news. I spoke with Darren Hamelin last year. He's the owner of Escoba Bistro, a funky restaurant and wine bar in downtown Calgary. In 2015, the property taxes on Hamelin's small business spiked by 97%. At that time, the city was demanding $67,000. Hamelin fought the increase, and had to spend $14,000 wading through red tape to do it. Ultimately he paid $34,000.

This year, he was again shocked by his property tax bill. This time, the city was demanding $55,000.

So after 20 years in business, Escoba Bistro is shutting its doors for good. Hamelin informed his staff on June 1.

Spiking property tax bills they just couldn't afford were the last straw.

Escoba was also hit hard by an increasing minimum wage, a slumping dollar, reduced sales thanks to the struggling economy and lost parking spots due to a new bike lane the city plopped in front of his door. 

It's no secret that restaurants in Calgary are struggling. Farm restaurant, another beloved Calgary staple, closed its doors recently. The Western Canadian chapter of Restaurants Canada said restaurants are facing "double-digit cost increases combined with double-digit declines in sales." They're sounding the alarm about the carbon tax, saying it's the absolute last thing Alberta restaurants need right now, faced with increases in property taxes, liquor taxes and minimum wage increases.  

Last year, the Canadian Taxpayers Federation called for a property tax cap across the province, after hearing dozens of stories like Darren Hamelin's. A property tax cap would limit property tax increases to no more than the rate of inflation. 

Here was Darren's story at the time:

Escoba Bistro owner Darren Hamelin hung a giant “For Sale $4.7 million” sign on his storefront -- the value at which the city of Calgary assessed his small business, after slapping him with a 97 per cent property tax increase. Hamelin hung the sign to protest the assessed value, asserting there’s no way his bistro would sell for $4.7 million. Yet he’s stuck with the tax hike. He told the CTF that his business is already stretched to the limit. Where is the money supposed to come from? 

Both the Alberta government and Calgary City Council failed to listen then.

More recently, a City of Calgary survey made crystal clear that Calgarians want to see an end to unnecessary spending and a reduction in taxes. 

With a projected property tax hike of 4.7% next year, and millions in carbon tax costs downloaded onto the municipality likely to cost taxpayers even more, the future ain't looking bright. 

During tough times like these, councillors should remember that taxes just aren't a pesky thing their constituents don't prefer. They're one of the costs that pile up quickly for business owners -- and those costs mean the difference between keeping the doors open, or closing them for good.

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