Business owners in Peterborough, Ont., want the city to reconsider increasing the commercial and industrial tax ratio in the 2024 municipal budget.
The Peterborough and the Kawarthas Chamber of Commerce says businesses currently pay property tax at 1.5 times the rate of residential property owners.
The next municipal budget recommends increasing that ratio to 1.65. The chamber says that hike would see tax revenue increase from $28.4 million in 2023 to $31.7 million in 2024. The chamber says the $3.3-million increase is 11.5 per cent more in tax revenue from businesses.
The chamber says a tax ratio shift will increase the total levy requirement from local businesses to approximately $6.3 million, requiring them to pay about 22 per cent more than last year.
Joel Wiebe, the chamber’s vice-president of government relations and communications, says businesses are concerned that a tax ratio hike now could be the beginning of a trend.
“If this is something we can do this year, I do have concerns this is something that can pop up again,”
Last week, Peterborough city council agreed to reduce the all-inclusive tax rate from the initially proposed 9.59 per cent to 7.38 per cent.
Council is expected to finalize and vote on the budget by mid-December.
Coun. Andrew Beamer, chair of the city’s finance committee, told Global News on Friday that the increase is fiscally responsible.
“We believe this move is reasonable and responsible and it will provide some relief to the residential tax payers,” Beamer said.
The chamber says while it applauds that decision to reduce the financial burden on property owners, businesses owners should not have to assume the financial hit.
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“Increasing the tax ratio for commercial and industrial properties does not save money, increase overall revenue, or reduce taxes — it merely shifts who pays more taxes,” the chamber stated. “Decisions around tax policy should have strategic goals and involve consultations.”
The chamber argues the target tax ratio of 1.5 began over 14 years ago as a strategy between city council and industry associations and businesses to increase economic growth. The chamber says it took a decade with “gradual decreases” in the ratio to get to the 1.5 mark thanks to regular input from the business community.
However, the city needs to obtain lands to help expand businesses expand and grow, the chamber argues.
“The result (1.5 rate) played a role in the rapid development of employment lands in the city to the point that we now have very few spaces for business to move and grow into,” the chamber states. “The Chamber has been advocating for many years for the expansion of regional employment lands. This would have a net positive impact on the taxes of residents in the City by creating a larger tax base and one that is taxed at a much higher rate than residents.”
Beamer says the 1.65 ratio on businesses still remains below previously elevated levels.
“It’s important to point out by reducing the commercial industrial ratio to 1.5 over those years, the residents — the taxpayers of the City of Peterborough — had to absorb $2 million in new tax burden,” he said.
Chamber president Sarah Budd says she’s disappointed in what she calls a “significant change in economic policy” by the city’s finance committee.
“A policy that was drafted with thorough consultation with local businesses, to give residents the appearance of a reduced tax increase,” Budd said. “We routinely hear from our government leaders that there is one taxpayer. Shifting $3 million in tax levy to one group of property owners and calling it savings for another does not give the impression that we are all in this together.”
The chamber says it recognizes the economic challenges in recent years due to the COVID-19 pandemic and rising costs due to inflation.
“Everything is getting more expensive. The struggles the City faces with its budget — rising labour, fuel, and capital costs due to significant inflation — are the same struggles being faced by our local business community,” the chamber stated. “This is compounded with many businesses accumulating significant debt during the pandemic — debt that is coming due for repayment in the near future and at significantly higher interest rates than initially anticipated.”
The chamber wants the city’s finance committee to maintain the current commercial and industrial tax ratio of 1.5
“And instead work toward growing our commercial and industrial tax base.”
— with files from Robert Lothian/Global News Peterborough
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