Toronto, – Ontario small business owners continue to pay far more than their fair share of property taxes, according to a report released today by the Canadian Federation of Independent Business (CFIB). The report compares property tax gaps in 230 municipalities, and concludes that on average, business property owners pay between two and three times more in property taxes than Ontario residents. The worst offender is the City of Toronto, where commercial owners pay almost four times more in property taxes than residents. Similarly, in the industrial class, businesses in Pembroke were charged four and a half times more than homeowners (see backgrounder). As such, property tax unfairness will be central during the upcoming municipal elections on October 27th.
“While modest progress has been made to correct this unfairness since CFIB last reviewed the property tax gaps in 2010, small businesses continue to be treated as cash cows by provincial and local governments,” said Nicole Troster, CFIB’s senior policy analyst for Ontario. “Given that property taxes are profit-insensitive, some small business owners are struggling to pay them, which means they could lose their property, business and livelihood.”
Property taxes in Ontario are made up of a provincial portion, which funds public education, and a municipal portion, which funds local services such as road maintenance, public transit and snow removal. The tax gap is greatest in the provincial education portion, with businesses paying as much as eight times the residential rate. In addition, unlike residents, business property owners often pay separately for many local services, like waste removal, but see no reduction in their municipal property taxes. Only a handful of smaller municipalities (including Manitouwadge, Casey, Perry, Bracebridge, Gravenhurst and Huntsville) charge business property owners rates comparable to those of residents.
“Reducing the property tax burden on small businesses does not mean that homeowners should pay more,” added Troster. “Instead, municipalities should better control their spending, pass on the savings from provincial uploading to residents and local businesses, and thoroughly identify cost savings for service delivery.”
CFIB is also recommending that the province immediately resume its plan to reduce business education tax rates for business properties and reject any requests for broader taxing powers by the municipalities.
Read the backgrounder, or view the full report.
CFIB is Canada’s largest association of small and medium-sized businesses with 109,000 members across every sector and region.
