By Nick Stewart
Increases to commercial property taxes throughout Ontario have left business owners upset about a lack of consideration from municipal and provincial governments.
“In the last five years, I’ve seen the property taxes for my business go from $70,000 to $110,000,” says George Badanai, owner of Badanai Motors in Thunder Bay.
“It’s ridiculous. That’s money that could have been reinvested into equipment or supplies.”
Having run his General Motors dealership since 1991, Badanai says he pays double the property taxes of a similar dealership in Manitoba, and suggests the municipality and the province need to work much harder if they wish to attract business to an area in need of continued economic diversification.
“If you truly want a place to be attractive to business, you have to take a look at the bottom line, and that’s taxes,” he says. “In effect, the only thing they can do is create attractive taxes, and I give them failing grades at that.”
Badanai is not alone in his unhappiness over commercial property taxes; unrest among its members recently spurred the Canadian Federation of Independent Business (CFIB) to create a report indicating the disparity between the property tax paid by residents and businesses to the province.
This report showed businesses pay a higher rate of property taxes than residents, with such taxes making up 3.7 per cent of Ontario’s GDP, more than any country in the industrialized world. Property taxes make up 2.9 per cent of Canada’s GDP, and 2.8 per cent in the United States.
This trend continues to a lesser degree in the realm of municipal tax ratios, which represent the second component of property taxes: two northern towns made it in the top 10, with Fort Frances in the eighth spot, with a ratio of 2.12.
However, Kirkland Lake emerged in this list as well, coming in second only to Toronto, with a tax ratio of 2.61.
“In Kirkland Lake, we used to have 25,000 people; now, we have 9,000,” says Mayor Bill Enouy, mayor. “I’m not making excuses, but I’m just saying we have this huge infrastructure and our assessment is very low.”
Enouy says the situation faced by small single-industry towns is a dangerous one. Tembec withdrawal’s from Opasatika and Smooth Rock Falls last year proved devastating to the local economy. This in turn forces the municipality to struggle to maintain its necessary level of income without taxing the residents out of their homes or increasing user fees beyond acceptable levels.
Without strong intervention from the province, the city is then left to tax businesses," Enouy says.
“It’s a bit of a dog’s breakfast.”
Such taxes are stifling commercial business growth throughout the province and the situation must change for the sake of the economy, says Satinder Chera, Ontario Director of Provincial Affairs, CFIB.
“What ends up happening is that most businesses then find it difficult to migrate to a storefront from their basement or garage.”
The struggle for a fairer ratio is not about pitting commercial against residential tax base.
“This is not a business versus residential thing,” he says. “The reality is that everybody would agree that all classes are overburdened. They’re just paying too much, and if you dig deeper, you’ll find that businesses are just having a much more difficult time.”
