Local small-business owners balk at surging property taxes

Small businesses in B.C. and Saskatchewan feel the pinch from rising tax rates and soaring land values

Local small-business owners balk at surging property taxes

Over the past year, small-business owners across Canada have been a picture of resilience as they faced multiple challenges – recruitment difficulties, the end of COVID lifelines, and sporadic lockdown orders – on the path to recovery. But in many neighbourhoods, that perfect storm of trials is being compounded by surges in property taxes.

As reported in Global News, some small businesses in British Columbia are facing property tax hikes between 25% and 55% this year. Those increases, as explained by Paul Sullivan, regional leader and tax expert for tax recovery firm Ryan Canada, stem from continued upward pressure on land prices, continued increases in municipal spending, and subsequent tax hikes.

In Vancouver, he said businesses that account for just seven per cent of properties in the city were saddled with 43% of the tax bill. The city has been exploring climate and social programs – all fine initiatives for a government to pursue, he said, but not if they’re being funded from the city’s property tax base.

“You’re averaging 6.5 per cent [budget] increase per year when other jurisdictions are less than half that,” Sullivan said.

According to the 2020 Canadian Property Tax Rate Benchmark Report from commercial real estate analysis firm Altus Group, Vancouver’s commercial property tax rates were actually the lowest in the country. Since 2015, they had decreased 55.3% to reach $6.73 per $1,000 of assessment. The ratio between commercial and residential property taxes in the city was also lower than the national average.

But because of sky-high property assessments in the province – which are expected to only climb further – many independent business owners renting commercial space are still under pressure.

Entrepreneurs in Saskatchewan are facing similar struggles. In a report by CBC News, small business owner Chad Berg related how skyrocketing property assessments in his neighbourhood, Riversdale, led to a spike in his property tax bill.

The owner of Saskatoon Clayworks, a pottery studio, was shocked to learn that he had to pay about $7,000 more in property taxes after his property assessment swelled from $350,000 to $600,000.

"I thought there must have been some sort of mistake," Berg told the news outlet. "I called and was told that they stood by the building's valuation and said that everything was totally normal."

Responding to concerned business owners, Councillor David Kirton said the city follows a revenue-neutral assessment process, with increases in one location resulting in decreases in another. That means phasing in increases in assessments – which would give business owners valuable breathing room – might be difficult.

"They might ask for a deferral and we could maybe try to take a look at that," he told CBC News. "But again, that comes with a cost to the city... I want to manage expectations here. I'm not sure that there's much we can do."

Follow WP on FacebookLinkedIn and Twitter

LATEST NEWS