TABIA Presentation to the Economic Development Committee

November 2015  

At the October meeting of this committee, Counsellor Kelly commented that the 21st century is one of economic competition among cities.  I thought that was entirely a propos of what I will be saying today.  And I don’t think that I am letting the cat out of the bag when I say that Ontario is having difficulty attracting industry to the Province, or even keeping what we have, and it’s even more difficult to attract it to Toronto.  For business, the deterrents are mostly cost and regulation.  Aside from trying to minimize its regulatory regime, there is not a whole lot that a municipality can do to overcome those deterrents, but there are areas where a municipality can wield significant influence.  For most businesses the most important area is property tax. Read more

We at TABIA had been telling City council and its finance administrators that a disproportionately high property tax was impairing Toronto’s business sector and ultimately would lead to reduced revenue as businesses abandoned the city.  After some years the finance people realized that our predictions were actually being realized.  The then Mayor, David Miller, recognized the problem and introduced the program to reduce the tax ratio.  Whereas the property tax rate on business was approximately five times higher than the residential rate, he proposed to reduce that ratio to 2.5:1.  Council in its wisdom adopted the program and continued it.  That program after many years is finally on track to achieve the intended result, but still has years to run.  I want to emphasize that the program has progressed without significant political opposition, in large part because finally people began to realize the necessity for it, but also because the actual tax on commercial property did not decrease, it continued to rise.  But it rose at a slower rate than did residential property tax.

So what TABIA is saying now is don’t curtail the program.  It is having the desired effect.  So let it run further until the ratio is 2:1.  In other words just continue on the same principles where the commercial property tax rate rises more slowly than the residential rate to achieve that ratio of 2:1, and aim for 2025 as the target for full implementation.  

BET

The 2nd big property tax issue is how the provincial government administers the business education tax.  That is the other portion of the City’s tax bill, the money that the city collects for the province.  It is designated on the bill as “education tax” but in fact the money just goes into general revenues.  Accordingly money raised in Toronto can be used elsewhere in the province and not necessarily for education.  So there is a bit of misnomer.  The province fixes the rates annually.  The problem for Toronto business is that the province does not impose a uniform rate.  It prescribes a different rate for each municipality, and it discriminates heavily against Toronto.  Here are some examples for 2015 for commercial property.

Spread for TO

 

on 1 mill.

 

Halton

.00882785

8,828.00

3,450.00

Peel    

.01069252

10,692.00

1,700.00

York                            

.01019142

10,191.00

2,087.00

Toronto

.01227826

12,278.00

 

No wonder that studies by experts in the property tax field describe the tax as (quoting from the report) “arguably the most inequitable provincial tax in Canada”.  And the discrepancy continues not with standing repeated promises by the Provincial Gov’t to rectify it.

What astounds us at TABIA is that although this system has prevailed ever since CVA came into effect, we have never heard any Toronto councillor object to this discriminatory tax, a tax which heavily penalizes the city in its efforts to attract business and employment.  Why is that?  Why is our council not standing up for Toronto businesses, and insisting on fair taxation and equal treatment?  We urge you to do so.  And what better place to raise it than at the newly formed Ontario-Toronto Burden Reduction Working Group.  

Lastly déjà vu, St. Clair all over again.  Construction on Eglinton Ave. continuing for years and many merchants are in dire straits.  Not acceptable.  It’s a big blot on the City and a shameful one.  Even for those businesses which survive the construction, the losses can never be made up.  And the losses are not only financial.  There is enormous stress on the proprietors, their health, their families and employees.  The answer as TABIA sees it is to recompense them.  The losses which businesses will suffer should be treated as part of the project cost.  When a project is costed out, these losses should be added to the expense column and used as compensation.  The costs to the City, when compared to the multibillion dollar cost of such projects, are insignificant, and would not add an insurmountable burden, but at least that loss is borne by all taxpayers and not loaded onto the backs of a relatively small number of business owners, their families and employees.

We know the mayor is concerned about this and we urge Council to address it.

For a pdf version of this presentation: Click Here

For a copy of the power point presentation presented at this appearance at Committee: Click Here

For a Video of the presentation: https://www.youtube.com/watch?v=rL0pdZ8nmLA#t=19m45s