Halifax Business Leaders Ask City to Cut Spending, Not Raise Taxes

HALIFAX – Local business leaders are telling the city’s councilors to find ways to cut spending, rather than raise property tax bills by 1.9 percent. The reaction from the business community comes on the heels of a city staff report recommending the increase for both commercial and residential properties. Council has not decided yet on how much of an increase, if any, will be implemented.

For residential properties, this increase will mean an extra $38 to the average tax bill. But for commercial properties, it’ll equal more than $800 to the average bill. During a pandemic where most businesses are struggling, this recommended increase has not sat well with entrepreneurs.

Bill Pratt is a restaurateur who owns several popular eateries in Halifax, including Cheese Curds, Habaneros, and Studio East. He is worried that a property tax bill increase will result in higher commercial rentals for business owners.

“Any increase this year is critical,” said Pratt. “I don’t know who would suggest that while we’re still in the Covid state. It’s not going to be any better this year. We’re already sinking. Why would they throw another brick at us? I don’t get it. I’m kind of gobsmacked that they would consider this at this time.”

“The landlords are going to pass that on to me. In every one of my locations, I’m going to be affected. (The landlords) aren’t going to take that; they’re going to pass it on to us.”

The reasons why the commercial tax bills will go up so much higher than residential is twofold. First, commercial properties are assessed at a much higher value than residential. According to Patrick Sullivan, President of The Halifax Chamber of Commerce, the average commercial property is valued at $1,465,000 in the city. According to a recent report from Remax, the real estate market in 2020 saw the average price of a residential property rise to $370,271 and it’s expected to reach nearly $400,000 in 2021.

Second, the city has a much higher rate for commercial properties compared to residential. A residential property owner pays just 67 cents for every $100 of assessed value, while commercial owners pay $3 for every $100 of value. That means the average commercial tax bill in Halifax is more than $40,000.

“The reality is commercial rates are significantly higher than residential rates,” said Sullivan. “Commercial tenants get far fewer services. And, frankly, for many businesses, we’re in the middle of a pandemic and their revenue is down…they simply can’t afford another increase.”

“My suggestion to the city is this may not be the year that we get to invest significantly more money in services or goods for the city of Halifax.”

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Sullivan says the Chamber of Commerce is putting together a report on ways the city can cut spending, rather than increase taxes. Once the report is finalized, the Chamber will present it to the council.

Luc Erjavec, who represents Atlantic Canadian eateries for Restaurants Canada, is so concerned about a potential increase in taxes that he wrote a letter to the council. In the letter, he informed the council that, because of the pandemic, eight of 10 Nova Scotian restaurants are losing money or barely breaking even and can hardly afford an extra expense.

“I think the impact on restaurants will be even more significant because we tend to be in prime locations (in terms of real estate value),” said Erjavec. “At a time when we’re not even surviving, we’re losing money… the concept of the city asking for more is unconscionable and totally unreasonable.”

“I just think they have to be empathetic to the plight of small business. You can’t put it on our backs, it’s unreasonable.”

Erjavec said he was disappointed in the responses he has gotten from councilors so far. Although one councilor, Shawn Cleary has publicly supported having residential taxpayers absorb the entire increase rather than hurt struggling businesses.

“I was shocked by how few councilors actually responded,” said Erjavec. “Most of the councilors that responded tried to pass the buck and blame the province, which, to me, doesn’t make any sense.”

“The fact of the matter is, we’re suffering, and you can’t hit small businesses with this tax increase.”

Erjavec, however, said he doesn’t want to pit residential taxpayers against commercial ones. Instead, he, much like Patrick Sullivan, thinks the city should try to cut spending first.

“We’ve made so many sacrifices to survive and we’re struggling to keep our employees employed and I think the city of Halifax needs to do the exact same thing,” said Erjavec. “And they need to look at how they cut costs and they have to make sacrifices. Maybe their pet project doesn’t go forward this year.”