TORONTO, Ont. –The province’s plan to allow larger municipalities to hike commercial, industrial and multi-residential tax rates risks driving business out of major cities, says OTA president David Bradley.
“It’s the wrong message at the wrong time,” says Bradley. “First the government cancels the corporate income tax rate reductions; then it talks about the possibility of raising fuel taxes; next it’s highway tolls. Where will it all end?”
The decision seems incongruous with the government’s supposed desire to limit urban sprawl and congestion, Bradley adds.
According to the Ministry of Finance press release that accompanied the announcement of the plan, under the current system (which prevents Toronto and 35 other municipalities from increasing municipal taxes on certain business property classes) “business taxes could go down, while residential property taxes rise substantially.”
As a remedy, the government will allow municipalities to apply a municipal tax rate increase on businesses that is no more than half of any municipal tax rate increase on homeowners. “It is ironic,” says Bradley, “that rising residential property values are seen as a bad thing even if it is a reflection of higher property values, but higher business taxes seem to be a good thing.
“Instead of encouraging municipalities to hike taxes on the business sector the provincial government should be working with municipalities to find ways to live within their means,” he said. “With our economy just beginning to get back on its feet, now is NOT the time to be opening the door to higher property and other taxes that could strangle what is a shaky economic recovery. For too long municipal politicians curried favour with voters by artificially suppressing residential rates and paying for it by over-taxing the business community.”
Bradley says the government’s announcement “smacks of being nothing more than the new provincial government trying to buy good-will with the City of Toronto and other major municipalities. It’s all about politics, not good tax policy.”
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