Rising property taxes are taking a toll on small business owners. The non-residential tax system has been criticized in the past for being unpredictable and unfair, however, it remains a key revenue source for most municipalities.
High commercial property taxes feel like salt in a wound for larger cities faced with ever increasing real estate prices. Toronto and Vancouver are great examples, but smaller regions, such as Niagara, are being affected as well; maybe even more so.
Property Tax Breakdown
Commercial property taxes vary depending on location. In a city like Toronto, the commercial property tax rate is 2.5 times the residential rate for the first one million dollar value of the property. In some municipalities, this rate is even higher. Rates can also vary depending on residential real estate costs as these prices often increase the assessed value of commercial properties.
The city of Toronto has begun a pilot project to examine a new tax class or financial relief by adjusting taxes for small business vendors in Kensington Market. This project is an attempt to lift the tax burden for small businesses and ensure that their growth is not limited.
The Impact on Niagara
While Niagara has seen substantial increases in both residential and commercial real estate prices, the increases are nowhere near the large spikes seen in areas like the GTA and Vancouver. The high property taxes in these cities are driving small businesses outward, as opposed to the Niagara Region. Niagara’s lower tax rate is acting as an incentive for local businesses to remain just that, local.
Downtown St. Catharines has been experiencing revitalization recently with many new small businesses populating the downtown core. However, the revitalization of the downtown does have a downside. MPAC (Municipal Property Assessment Corporation) values have risen affecting the property taxes of downtown buildings. In cities where MPAC values spike, the burden falls onto the city to adjust rates appropriately to level out tax increases in order to keeping small businesses thriving.