Business Owners Or Homeowners? Who Should Absorb A Halifax Tax Increase?
HALIFAX – The Halifax Regional Municipality has a tough decision to make as councilors debate taxation for the 2021-22 budget. As is the case whenever government raises taxes, the outcome is likely to leave many dissatisfied with a bigger bill to pay.
A staff report has suggested raising property tax bills by 1.9 percent for both residential and commercial rates to generate more revenue. For the average residential property, this will mean paying just an extra $38. But commercial rates are higher than residential rates in Halifax and commercial properties are worth more, by and large. A 1.9 percent increase will mean the average commercial property will pay more than $800 extra this year.
Given the fact that many businesses are struggling to survive during the Covid-19 pandemic, many feel it is unfair to expect small, suffering, business owners to pay more taxes. District 9 Councillor Shawn Cleary is even suggesting that the entire tax increase be shouldered by residential property owners. Cleary says if residential payers absorb the cost for businesses, the average increase will go up from $38 to $66.
“This is a tough year, no one wants to raise taxes on anybody,” said Cleary. “Any increase we make will hit businesses proportionally harder.”
“The burden of the pandemic has not hit everyone equally. Lots of people are doing quite well, some people are not doing quite well.”
Cleary lives on Quinpool Road and he talked to several businesses on his street about the impacts of increased taxes. From those conversations, he got a scope of the effects an increase would have on small businesses.
“Those small businesses that own their own buildings, they’re going to get anywhere from a $500 increase to a $1,000 dollar increase in their tax bill this year,” claims Cleary.
But the pandemic has been difficult on more than just businesses. Many employees have lost their jobs or seen reduced hours due to Covid-19. One could argue now is not the time for working-class homeowners to faced increased taxes as well. It’s not surprising that reaction by homeowners to Cleary’s idea has been mixed, to say the least.
“Certainly, I didn’t get into politics to be popular,” said Cleary.
There is one major sticking point with any plan to spare businesses a tax increase: it’s not just small businesses that will get a break. Under the municipal tax structure, the Walmarts, Sobeys, and other major corporations will get off the hook as well.
Halifax Mayor Mike Savage said he wishes the province would allow the city to have different tax classes for small and large businesses. But, as it stands, all business properties are lumped into the commercial category.
“There are people in the community that we would like to be able to treat separately, small businesses in particular,” explained Savage. “We just don’t seem to have any mechanism that will allow us target our support to them.”
“So, we either raise the taxes or we don’t.”
If the city chooses to forgo a tax increase, it will have to find areas where it can cut costs. But Halifax already did major cuts last year when the pandemic first hit. They laid off 1,500 workers, most of whom were temporary or seasonal.
Halifax also lost a lot of money because they had to keep bus services operating, even though they went months without collecting fares from passengers. The budget for Halifax metro is over $100-million.
Like most cities in Canada, Halifax is also limited in ways to raise extra revenue. More than 80 percent of its money comes from property taxes. And last year, many property owners, both residential and commercial, couldn’t afford to pay their tax bill, which resulted in deferred revenue for the city.
Savage did not say how he would like to see a tax increase split. But he did mention that the 1.9 percent is just a starting point recommended by staff. There are still months of public debate before a final number is voted on.
“I think we have to go through and see and see what proposals for spending are from every department,” said the Mayor. “We have a very disciplined and thorough budget process. At no time, since I’ve been Mayor, have we ended up with the same rate that we started off with.”
“It’s still early days yet, we don’t know what the rate will be or how it might be applied.”
Savage said Halifax has done a good job over the years keeping tax rates low for everyone, despite the city growing over the past few years. He doesn’t think 1.9 percent is a major tax increase, but says he understands why people might feel it’s too high during a pandemic.
“1.9 percent is not high, but it may be too high for some people. I’m certainly sympathetic to that, and I’m certainly sympathetic on the business side, because the effects of Covid have been so unequal. Some businesses have done okay, and other businesses have been gutted.”
“Every time you change taxation, there are winners and there are losers and it’s never as easy as you think.”