Tax Committee Report for TABIA AGM – May 9th, 2023
Re: Tax Committee Report for TABIA AGM – May 9th, 2023
Madame chair: Research shows that the 13th Zoom meeting is when people stop giving a damn! I think we’re past 13, but I hope people don’t stop giving a damn until I am finished my report, because I will be talking about property tax.
I am at risk of sounding like a broken record, and please don’t tell me that you are not old enough to know what a record is. My wife, who is a now-retired elementary school teacher, once took a record, a 33 1/3 into her classroom, and her children wanted to know where she got such a big CD; and please don’t tell me that you are not old enough to know what a CD is.
This report will be a follow up of last year’s report because, that is where the trajectory of property tax is taking us.
Last year we were able to announce a significant reduction in property taxes for small businesses fortunate enough to fall within a new sub-class of taxpayers; and some of you were among the 19,000 businesses which saw the benefit of that. That number is based on info from the city Finance Dept (FD). We do not have the data to be able to verify that. And we don’t know how many businesses have been excluded, except we believe the number to be in the thousands. The sub-class will benefit from a 15% reduction from the standard commercial rate, as established by the city in its annual budget, and, we believe that the Province matched that with a similar 15% reduction in the Business Education Tax rate, which is really just more property tax. No confirmation!! The provincial reduction is supposed to be 15% off its new standard rate of 0.88%, which hopefully is not being increased. That reduction would be in addition to any reduction which would result from the 2022 Budget’s amendments to that tax, which for Toronto businesses, is estimated to be about 10%. We cannot verify these statistics, but perhaps a show of hands will be interesting. How many people here either realized those reductions in their businesses or know of businesses within their BIA which did? If you did, just raise your hand, and if you are not on camera, please just add a comment to the chat.
Anyhow there was unfinished business. Unfortunately, not all small businesses which are included are seeing the sub-class reductions, because there is no provision requiring landlords to pass the reduction on to their tenants. Furthermore, FD has drawn the parameters of the sub-class so narrowly that many thousands of small businesses will not fit into the definition.
To add insult to injury, the revenue loss to the city from the sub-class is to be made up a by higher tax rate on the rest of the commercial class, which would include those small businesses not included in the definition. It was anticipated that the increase would be basically 1% on top of the standard commercial rate, which City council established in its 2022 budget, and now presumably in 2023.
The graduated rate was discontinued.
The City’s enactment of that reduction directs the FD to report no later than the first quarter of 2022 (not a typo) on a number of issues:
- the feasibility of developing a mechanism for ensuring that Subclass property owners with tenants in gross leases pass down the benefits of reduced property taxes to those tenants; and
- if such a mechanism is not feasible on the part of the City, whether there are any changes to Provincial law which could achieve that objective. The City has clarified that and has concluded that the only way that can be done is with enabling legislation enacted by the Province. The mayor’s office told us they would be making that request of the Province, and that we would be informed when they are making it, so that we can add our voice. We were then told that the request has been made, but the bureaucrats denied the request saying that the City already has the necessary power. The problem is that the only enforcement power the City has is to remove the property from the sub-class, but that does nothing to assist the tenant and of course can involve a lot of administrative work. So that is something of an impasse while bureaucrats pass the buck back and forth.
In addition, City Council directed the FD to report before the 2023 taxation year on the feasibility of:
- adding Business Improvement Areas to the geographic areas covered under the Subclass, under section 3(a)(B)(i) of Attachment 1 to the report (October 12, 2021) from the Chief Financial Officer and Treasurer;
- developing additional criteria and/or an application-based system that would allow for strip malls, which have small businesses as tenants, to be included within the Subclass; and
- developing an application-based system that would allow for additional small commercial properties, which fall outside of the current eligibility criteria of the Subclass, to be included within the Subclass.
Former Mayor, John Tory, proclaimed that he was in favour of these provisions (after all they were part of his motion), but what effect does a time limit have on a civil servant? Apparently no work has been done on these issues yet. What, you may ask, is the definition of procrastination: When you’re willing to go to some serious lengths to NOT do the one thing you’re supposed to: I’m not going to point fingers, but we know who is stalling.
Tory also supported a further reduction of the tax rate to implement a 20% reduction, but frankly I have always felt that was pie in the sky, and even more so now that Tory is out of the picture.
Anyhow, we were trying to follow up on all of these measures but have seen no action so far, and we don’t expect to see any until a new mayor has been elected. And of course the new mayor may have completely different ideas, and it will take an extremely strong mayor to push City staff to do what they are supposed to do. Sometimes I think that the unspoken motto of the civil servant is “Never put off till tomorrow what may be done just as well the day after tomorrow. Really, it’s awfully hard work doing nothing.
In the meantime, you can help move things in the right direction by taking it up with your local councillor. Remember, as Gabriel Garcia Marque said: “He who awaits much can expect little.”
That is my report.