What Our High Property Tax Rates Mean for Small Business
One of the things New Brunswickers like to brag about to those outside the region is how insanely cheap our real estate is compared to markets in bigger cities.
While this is true, when it comes to being taxed on that real estate, it’s a different story. This fact was driven home this year when the provincial government admitted to 2,400 assessment errors and many other residents saw shocking increases. But high property taxes impact not only individuals and families but commercial property owners and businesses too.
Commercial property owners in New Brunswick’s three major cities pay significantly more in property taxes than some of the country’s biggest municipalities with lots of development. Louis-Phillip Gauthier, director of provincial affairs for New Brunswick at the Canadain Federation for Independent Business, says when it comes to property taxation, commercial property owners are some of the hardest hit.
“In addition to concerns surrounding assessments, the tax gap between commercial and residential property owners has been a long-standing issue,” says Gauthier. “As an example, in CFIB’s 2016 Entrepreneurial Communities report the tax gap for Fredericton was 2.89. This means that businesses in this community pay almost three times the amount of property taxes that residential customers do.”
Though property taxes are necessary, Gauthier says the province’s high rates are part of an ever-increasing amount of expenses small businesses in the province have been facing. With the exception of the reduction of the provincial small business corporate income tax rate, he says business costs “have been and continue to be layered one after the other on the back” of the province’s business owners.
“Over the last two years, small businesses have faced increased costs in the form of higher property taxes, gas and diesel taxes, the land transfer tax, personal income taxes, minimum wage and workers compensation rates,” he says. “Business owners know that additional costs are on the horizon. Minimum wage is scheduled to increase again this year, employment insurance rates are going up, workers compensation premiums are climbing, Canada Pension Plan premiums will go up and a carbon tax will be imposed all within the next two years.”
Gauthier argues that a higher tax burden on businesses stunts economic growth.
“By lowering the total tax burden faced by small businesses, the provincial government would stimulate investment and debt repayment while supporting job creation, increased wages and additional investments in training,” he says. “A sustained high total tax burden will have a dampening effect on these investment areas, therefore affecting the growth potential of businesses.”