Businesses in Ontario pay much higher property tax rates than residents, despite using fewer services. The Ontario Municipal Act requires municipalities to tax commercial and industrial properties at a ratio of 0.6 to 1.1, but many municipalities have no plans to comply.
For 2024, the City of Peterborough moved to increase its business tax ratio from 1.5 to 1.65, shifting added tax burden onto the business community in order to minimize the rate increase for homeowners. This trend is causing concern among businesses across Ontario.
The Peterborough and the Kawarthas Chamber of Commerce has put together a policy resolution on this tilted “Enforcing fair property tax ratios” that we have submitted to the Ontario Chamber of Commerce (OCC). It will go to the membership to debate and vote on in April, at which point approved resolutions become part of the advocacy efforts of the OCC for the next three years.
Commercial and Industrial property taxes in Ontario municipalities are calculated based on a ratio of what residential property owners pay. For example, if a municipality has a commercial tax ratio of 1.75, commercial property owners are paying 175% what a resident is paying for the same amount of property tax assessment.
The Ontario Municipal Act Reg. 386/98: Tax Matters – Allowable Ranges for Tax Ratios sets an allowable range for property tax on commercial and industrial properties at 0.6 to 1.1.
A quick look at tax ratios from a selection of municipalities from across Ontario from 2023 demonstrates that this range is not being followed:
Barrie 1.43 1.51
Milton 1.46 2.09
Peterborough 1.5 1.5
Brantford 1.75 2.25
Guelph 1.84 2.2
North Bay 1.88 1.4
Woodstock 1.9 2.63
Sudbury 1.91 3.45
Belleville 1.92 2.4
Kingston 1.98 2.63
Thunder Bay 1.98 2.37
Clarington 1.98 2.49
Sarnia 2.02 2.4
Niagara Falls 2.15 2.95
Sault Ste. Marie 2.31 4.38
Municipalities are coming under increasing financial pressure due to factors that include inflation in everything from capital projects to wages, increased demand for services, and an increased role in areas like public health and homelessness. Despite this pressure coming from a variety of sources, they essentially have one tool for raising the funds to do it — property taxes.
More financial pressure on municipalities is leading them to further increase tax ratios to the benefit of residents at the expense of the business community.
The City of Peterborough spent a decade lowering its commercial and industrial tax ratios to 1.5, achieving that several years ago. This year it voted to increase the tax ratios to 1.65, shifting $3 million in taxation from residents to businesses. Businesses in the City of Peterborough will on average pay 22% more in property tax in 2024.
Similar stories are playing out across Ontario and businesses cannot continue to bear the brunt of property taxation on behalf of residents. Businesses use fewer services but are expected to pay significantly more for them.
It is clear Reg. 386/98 of the Ontario Municipal Act has no teeth. Municipalities across Ontario have been charging property tax ratios well outside the allowable range for decades with no plans to change. The Government of Ontario needs to put some teeth in the act and hold non-complying municipalities to account.
That the Ontario Chamber of Commerce urge the Government of Ontario to:
Enforce existing property taxation ratios set out in the Ontario Municipal Act Reg. 386/98: Tax Matters – Allowable Ranges for Tax Ratios by withholding provincial support — including access to provincial funding streams — to municipalities that:
Consumer behaviours have changed and with it the landscape for small businesses across Canada. It’s important to step back and have a look at what’s happening in the industry.
A new report from the Canadian Chamber of Commerce’s Business Data Lab titled A Portrait of Small Business in Canada: Adaption, Agility, All At Once does just that.
Small business is the backbone of the economy, making up 98% of businesses in Canada, employing 11 million people. Small businesses are considered businesses with 1 to 99 employees. Within that designation, micro businesses (1 to 4 employees) are by far the most common with the median small business having fewer than five employees.
The report states: “This underscores the importance of improving our understanding of the business realities of all small firms, but especially micro firms, while ensuring that adequate financial, operational and regulatory support measures boost the resilience of small and micro businesses for the sake of Canada’s economy. Put simply, the survival of micro firms is a macroeconomic issue for Canada.”
The report also looks into the realities, challenges, and opportunities for small businesses owned by women, persons with disabilities, members of the LGBTQ2s+ community, immigrants to Canada, Indigenous peoples, and visible minorities.
For example, immigrants make up 25.5% of all private sector businesses, well above their 23% representation in Canada’s population. However, within this, immigrants are less likely to own larger businesses.
Progress was made in recent years with women having more opportunity through flexible work arrangements, leading to more women in in-demand work at higher pay. While government programming aims to increase access to childcare, the transition back to the physical workspace is threatening to scale back progress for women.
Majority ownership of private sector small businesses in Canada, by underrepresented/equity-seeking groups.
• Immigrant to Canada – 25.5% of businesses/23% of population
• Visible Minority – 19.2% of businesses/26.5% of population
• Women – 17.8% of businesses/50.9% of population
• LGBTQ2s+ – 3.3% of businesses/4% of population
• Persons with a disability – 2.2 of businesses/22% of population
• Indigenous – 2.2% of businesses/5% of population
When looking at the situation for small businesses, Business Data Lab notes many of the problems they faced prior to the pandemic persisted or were exacerbated during it. They found the smaller the firm, the bigger the problems. Smaller businesses faced more significant revenue declines, worse debt constraints, and have more difficulties adopting new technologies.
Workforce challenges also hit small businesses the hardest. While large businesses increased their employment numbers by 26% and medium businesses by 13% from January 2020 to July 2023, small businesses had no growth registering a 0% increase in employment.
The report itself has a lot more insight and information and is worth a read.
While vulnerable, our small and micro businesses remain nimble. Investing in digital will help, but it’s not a one-size-fits-all solution.
The report notes: “With one era of global upheaval in our rearview and another with as many uncertainties ahead, a bright light from the data is the nimbleness of small businesses. However, even with their impressive resilience, agility and adaptability in leveraging the appropriate technologies to stay connected with customers and to streamline their operations, the reality is that small businesses remain strapped for funding, resources and exposure.”
It’s imperative that we invest in our local small businesses — it goes a long way to building a stronger, more resilient local economy.
The Peterborough and the Kawarthas Chamber of Commerce acts as a catalyst to enhance business growth, opportunity, innovation, partnerships and a diverse business community.