The impact of property taxation on business investment in Alberta
The impact of property taxation on business investment in Alberta
Author
Dahlby, Bev
Ferede, Ergete
Khanal, Mukesh
Faculty Advisor
Date
2021
Keywords
tax rates , non-residential property , business investments
Abstract (summary)
Alberta municipalities rely heavily on property taxes levied on residential and non-residential sectors to finance local public services. This paper investigates the effects of non-residential property tax rate on business investment using panel data from 17 Alberta cities over the 1998-2017 period. We find that a one mill increase in the non-residential property tax rate is associated with a $49 decrease in commercial and industrial real capita investment. Based on this estimate, we calculate the marginal cost of public funds for the non-residential property tax, which range from 3.12 for Lethbridge to 1.21 for Leduc. We also find that business taxes that are levied on the rental value of a business property have a negative impact on investment, while higher expenditures on municipal services do not have a significant effect on business investment.
Publication Information
Dahlby B, Ferede E, Khanal M (2021). The impact of property taxation on business investment in Alberta. SPP Research Papers, 14(8). https://doi.org/10.11575/sppp.v14i.69686
DOI
Notes
Item Type
Article
Language
English
Rights
Attribution-NonCommercial (CC BY-NC)
