A proposed new law would allow Alberta municipalities to offer tax breaks for up to 15 years to businesses willing to set up in commercial or industrial areas of their town or city.

Bill 7, the Municipal Government (Property Tax Incentives) Amendment Act, gives municipalities new powers to pass bylaws to provide tax exemptions, reductions and deferrals.

"This will give municipalities the tools they need to bring to reduce the regulatory burden on businesses, bring investment back into our communities and restore the Alberta advantage for all," said Municipal Affairs Minister Kaycee Madu, at a news conference Tuesday in Sherwood Park.

Right now, municipalities can only cancel, refund or defer taxes based on hardship, with decisions made on a case-by-case basis.

The government said it hopes municipalities can use these new powers to encourage economic development in non-residential areas — including vacant, derelict or under-utilized commercial or industrial property which are, or may be, contaminated.

"We know municipalities know what's best for their residents and we're simply getting out of the way," Madu said.

The tax breaks can't be in place any longer than 15 years.

Government officials say these tax exemption programs have been used elsewhere, including Saskatchewan and British Columbia.

The NDP Official Opposition said most of the new taxation powers were already allowed under Section 347 of the Municipal Government Act.

"I don't understand what the government thinks it is going to achieve with this act," Calgary-Buffalo MLA Joe Ceci, the NDP's critic for municipal affairs, said in a new release.

City council in Medicine Hat introduced a bylaw in April that incorporated these new powers.

A pilot project will use tax breaks to encourage development on two properties owned by the city: the former Medicine Hat arena and a parking lot across from city hall.

Edmonton Mayor Don Iveson said he thinks giving municipalities more flexibility is a good thing, but he's concerned about competition at the regional level.

"I think we need to have a conversation in our region about how to use these tools to grow the regional economy, because selective use by one of us to undermine the others could be one risk here," Iveson said.