On Tuesday the CD Howe Institute released its annual assessment of property taxes across the country and suggested that the property tax burden in St. John’s, Newfoundland is not as onerous as the property tax burden in Canada’s other major cities.
The document points out that “there are gaps in the way Canadian governments and analysts measure the overall tax burden on business investment, primarily because they exclude business property taxes.”
There is a gap in this study, as it only includes property taxes, and no investor would ever consider just one myopic factor in their assessment of a location in which to invest.
Peter Tomlinson, one of the study’s authors admitted on CBC Radios On the GO, that this study is just on taxes that affect capital investment. It does not include the myriad of other taxes and fees (permit fees, water taxes, development fees), that businesses must pay.
In addition, the rationale for why St. John’s ranked high in the CD Howe report is because it is not subject to provincial property tax. However, there is a litany of other provincial taxes and fees that businesses must pay in NL (corporate tax, payroll tax, tax on commercial insurance, WHSCC premiums).
Business tax is just one factor in deciding where to invest. Other factors include:
· The price of electricity
· The cost of labour
· The length of time it takes to get through red tap like the permitting process
St. John’s is already challenged by the above noted factors - add to them our remoteness, everything has to float or fly, which drives up the cost of doing business. We have to be better than the rest in terms of taxation to mitigate these challenges.
A strong vibrant business community is important to this city:
o Over 75% of the population is employed by the private sector
o 1300 businesses pay $74 million in taxes to the city
o Small business reflects the community by providing products and services unique to the area
o They provide products and services, wanted and needed
o They make a significant contribution to the fabric of the community.
o They make donations to charity
Businesses are hurting – several have told us they want to stay in this city and province but only will do so “as long as it makes sense”, that they are teetering on the cusp where it no longer makes sense.
Placing an additional tax burden on them will exacerbate this situation, especially when you consider the piling on of electricity rates, and carbon tax with no relief for beyond 2019.
Commercial property owners shoulder a disproportionate tax burden compared to residents. Commercial property owners in St. John’s pay three times more property tax than residents and receive far fewer services from the City.
We need to make St. John’s the Go to place to do business in the province. Increasing the tax burden on business is a step in the wrong direction.