TORONTO: Small business owners continue to pay more than their fair share of property taxes according to a report released today by the Canadian Federation of Independent Business (CFIB).
The report, titled The Tale of Two Tax Rates: How Ontario and its Municipalities Tax Business Properties measures the property tax gap between residential and industrial/commercial properties in 201 Ontario municipalities.
“While some progress has been made to right this injustice since CFIB last reviewed the gap in 2006, small businesses continue to be treated as cash cows by the property tax system,” says Satinder Chera, CFIB’s director of provincial affairs.
CFIB’s tax gap suggestions:
- Accelerate and expand the Business Education Tax (BET) relief plan
- Reduce the tax gap by controlling local spending
- Do not allow another City of Toronto Act. Granting more taxing powers will not solve budget woes
- Tax all property classes proportionately to the services they receive
- Collect all property tax data in one public repository
“It has become convenient for local governments to increase taxes on businesses to cover their budgetary shortfalls, resulting in an unbalanced property tax system that undermines job creation and economic growth.”
View graphs outlining regions with the highest tax gaps in Canada
With very few exceptions, municipalities have done little to recalibrate the rates for all property classes. In 2009, industrial owners in Pembroke paid four times more in property taxes than residents—a tax gap of 4.39—on property of similar value, followed by Toronto (3.56) and Hamilton (3.33).
In the commercial class, businesses in Toronto paid over three times more in taxes, followed by those in Owen Sound (2.3) and Kirkland Lake (2.21).
“At a time when governments are looking to increase other profit-insensitive taxes, they really need to be reminded of the potentially devastating impact these taxes can have on individuals and businesses,” said Chera, noting that property tax has no regard for profit or income, which can amplify its burden on businesses during a downturn.