When it comes to property taxes in Calgary, much of the recent discussion has focused on the plight of businesses. But, quietly, it's homeowners who have been paying a larger and larger share of the bill.

You've likely read stories talking about "soaring" tax rates on commercial properties and a rising "tax burden" on businesses.

And there's no doubt some business owners — particularly those in suburban areas with increasing property values — have been hit hard lately by sudden tax increases. Some, in fact, have faced massive increases. This comes from the arcane and uneven way that property-tax calculations work.

Business owners complained — loudly.

Some have even closed up shop.

In response, city council has taken special steps for the past two years to blunt that blow, with $86 million in targeted tax relief. And today, members of council will consider spending $89 million more to extend this relief again in 2019 to businesses facing the steepest tax increases.

But, when you look at the city as a whole — at all the taxpayers — you might be surprised by what the numbers show.

The net municipal taxes paid by Calgary businesses this year will actually decrease by about $25 million, when you factor in the already-approved tax relief and the phase-out of the city's old-fashioned business tax (a soon-to-be extinct fee that is separate from property taxes). Homeowners, meanwhile, will pay about $20 million more than they did last year.

This continues a general trend over the past decade, in which Calgary's revenue comes increasingly from residential taxes and less from commercial taxes.

Now, before people get all up in arms about what's fair and what isn't, it's worth noting that this shift actually puts our city more in line with the way other cities work.

For a long time now, Calgary homeowners have enjoyed relatively low property tax bills and the city has relied on a strong commercial sector to pick up an unusually large share of the tab. But that has been changing, slowly and steadily.

And there are indications it could shift even faster in the future.

Here's why.

Shifting tax burden

Businesses still pay the majority of the municipal taxes in Calgary, but their share has been shrinking.

A decade ago, commercial taxes accounted for 59 per cent of city's total tax revenue.

Today, that's down to about 55 per cent.

You can see how the gap has been narrowing in the graph below.

Even with these changes, Calgary remains unusual in its tax split.

"Calgary is a little bit unique in the sense that tax is higher on the business side than on the residential side," said Alan Arcand, associate director with the Centre for Municipal Studies at the Conference Board of Canada.

Yep, we're the exception, not the rule.

In other major cities, it's homeowners — not businesses — who foot the majority of the tax bill.

In Edmonton, for example, homeowners pay about 52 per cent of municipal taxes, while businesses pay 48 per cent. In Vancouver, the split is about 55 per cent residential. And in Ottawa, homeowners pick up 65 per cent of the tab.

In Vancouver, homeowners pay about 55% of the city taxes. In Calgary, it's businesses that cover most of that tab. (AP Photo/Tourism British Columbia, Albert Normandin)

So, businesses in Calgary still pay a larger share of municipal taxes than businesses in other cities. But, when compared to what they used to pay, their share of the total burden is shrinking.

Now, before we go on: this is an "on-average" sort of thing. Individual businesses will face different situations. But we're looking at the overall situation here.

At this point, you might be wondering: What about those headlines? The ones about Calgary's "soaring" business tax rates?

They're not technically wrong.

The key here is the word rate. The tax rate has gone up for businesses, even while the share of actual dollars paid has gone down.

And this is where things get really interesting.

Tax rate up, tax share down

One big reason for the tax rate increase is the declining value of commercial properties — particularly downtown office buildings, which continue to sit largely vacant and thus, are less valuable.

Back in 2015, the total value of downtown offices was assessed at about $24 billion.

By 2019, the city expects this will have plunged to roughly $12 billion.

This massive decline has acted like an anchor — dragging down the entire commercial tax base.

The total value of all commercial properties in Calgary was $71.8 billion in 2015. That has fallen steadily over the past three years, hitting $65.3 billion in 2018.

The value of residential properties, meanwhile, has grown slightly over that same time, from $209.3 billion to $214.8 billion.

The thing about property taxes is that as values go down, the rate must go up — simply for the city to collect the same amount of money as it did the year before. (Not to mention any increases.) Hence, the "soaring" tax rates on businesses.

But wait! There's more.

Business tax phase-out

Right now, Calgary charges two different taxes on businesses.

In addition to the non-residential property tax, commercial enterprises are also subject to a separate business tax.

The city started phasing this second tax out in 2014. At the same time, it has been increasing its non-residential property tax by a corresponding amount. This process of consolidation will wrap up in 2019, at which point the business tax will be fully eliminated and absorbed into the non-residential tax.

This makes no difference in terms of actual dollars, but it magnifies the appearance of recent increases in the non-residential property tax rate.

That rate has grown by 43 per cent since 2015, which sounds like a lot. But, at the same time, the business tax rate has fallen by 72 per cent.

It probably helps to look at it in terms of actual dollars, though.

You can see that in the chart below. (That shrinking brown blob at the top is the business tax.)

In terms of total taxes (non-residential property tax plus business tax), businesses are paying about 10 per cent more now than they were in 2015.

Homeowners, meanwhile, are paying 13 per cent more.

And this is what's behind the slow shift in tax burden from businesses to homeowners: The amount of money the city collects from residential properties has been growing slightly faster — in terms of actual dollars — than the amount of money it collects from businesses.

Again, this is across all taxpayers in the city. There will be plenty of examples of individual businesses that have had an actual increase in real-dollar terms. And some —specifically, those who have seen their property values increase the most — will have been hit by huge tax increases.

Which brings us back to that tax relief program.

'Band-Aid' solutions and zero-sum games

Calgary officially calls its tax-relief effort for suburban businesses a "phased tax program" but some members of city council have taken to calling it a "Band-Aid solution."

It may ease the pain in the short term, they say, but using city reserve funds to limit tax increases for certain businesses isn't sustainable in the long term. And it doesn't address the root causes of the massive increases facing business owners who have been primarily responsible for picking up the slack left by the sagging downtown-office sector.

"At some point we have to determine how we're going to address this structurally," Mayor Naheed Nenshi said last week. "And the answer is not put it all on the residential property tax base."

The problem is, there aren't a heck of a lot of other answers. At least, not easy ones.

That's because property taxes are essentially a zero-sum game, meaning the less one person (or group) pays, the more everyone else must pay.

"It's the unfortunate position that cities are in," said Arcand, with the Conference Board.

"There's pressure to keep the business tax low but at the same time they want to make sure that they're not overburdening their residential taxpayers."

One could make the case, though, that residential taxpayers are currently underburdened. (Insert angry outburst here.)

The Calgary Chamber has certainly made an argument for a reduced tax rate on the city's business community, relative to what homeowners pay.

Indeed, as we've seen, Calgary homeowners — compared to other cities — have paid relatively less tax when it comes to the business-residential split.

This has been largely thanks to that once-mighty downtown office sector, said Richard White, who served as executive director of the Calgary Downtown Association from 1995 to 2006.

That was a time of nearly constant growth in the city's core, White said, with Calgary averaging one new office tower per year. As a result of all that construction, the city's tax rolls grew just as quickly.

"We had this golden goose downtown for many, many years," he said.

"An office building generates more tax per square foot than any other type of property assessment."

But White believes it will be a decade, at least, before office construction picks up again in downtown Calgary. In the meantime, he said, "the city really has to rethink" how it will make up that source of revenue.

Will homeowners be expected to pick up more of that slack? White wouldn't be surprised.

But council, ultimately, will have to decide.

Calgary: The Road Ahead is CBC Calgary's special focus on our city as it passes through the crucible of the downturn: the challenges we face, and the possible solutions as we explore what kind of Calgary we want to create. Have an idea? Email us at calgarytheroadahead@cbc.ca

More from the series: