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COVID-19: Ottawa small business property tax cut proposed for 2022

Small business properties in Ottawa could see an average savings of $1,500 on taxes starting in 2022 under a new proposed tax subclass. THE CANADIAN PRESS/Adrian Wyld

Ottawa Mayor Jim Watson and city staff are proposing a new tax subclass to cut small businesses a break on property taxes while asking big box stores to foot the bill for any losses in revenue.

The proposal is among a package of COVID-19 recovery supports that still require approval from city council and, in some cases, the province.

The new tax subclass would reduce property taxes by 10 per cent for roughly 4,700 commercial properties in Ottawa that are home to some 7,800 small businesses. The subclass would cover slightly more than a third of the 12,000 commercial and industrial properties in the city.

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The average small business property assessed at $600,000 currently pays $15,000 in municipal and education taxes, according to the city. The proposal would see a discount of $1,000 applied to these tax bills and an extra $500 taken off if the province matches the reduction in education taxes.

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Landlords would be “mandated” to pass the savings on to their tenants, Watson said in a press conference Friday afternoon, lest they lose the discount.

A release states that a slew of businesses could stand to benefit from the proposed subclass including “the vast majority” of small offices, small retailers, restaurants, taverns, daycares, recreational sites, and various mixed-use properties.

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Implementing the proposal hinges on changes to provincial regulations that city staff are expecting later this year. The tax break could therefore come into effect starting in 2022, but would be permanent thereafter.

The loss in tax revenue would be made up by hiking property taxes on big box stores such as Walmart and Costco by roughly 0.68 per cent, Watson said.

This shakes out, the mayor argued, because big box stores have done “very well for themselves” as they’ve been able to stay open amid COVID-19 lockdowns in the province.

Ottawa’s chief financial officer Wendy Stephanson said the city will consult with the entire business community, including big box players, before implementing the proposals.

A package meanwhile will go to the finance and economic development committee on April 6 for approval with a number of COVID-19 recovery measures, including:

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  • A 50-per cent reduction to rental fees on city facilities for arts and cultural groups from Sept. 2021 to the end of 2022;
  • Guided by Ottawa Public Health recommendations, a staged return to the workplace for city employees starting in Q3 to support nearby businesses who rely on workers;
  • Increasing the number of co-op placements at the city for students at local post-secondary institutions;
  • Advocating to the federal government on behalf of the Ottawa airport for funding for construction of the LRT station as part of the Trillium Line Stage 2 expansion and the return of international flights into the local travel hub.

While Watson unveiled the package of supports as a lifeline for local businesses affected by the pandemic, COVID-19 levels continue to rise in Ottawa and the rest of the province. Some medical experts have cautioned officials about further reopening the economy now as the coronavirus variants of concern spread rapidly and vaccination efforts are constrained by an uncertain supply of doses.

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Asked about the prospect of another provincial lockdown, Watson said it would have a “significant” impact on local businesses and that restaurants would likely be the most affected.

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“They’ve been on a real rollercoaster ride over the past 12 months,” he said.

But if Dr. Vera Etches, Ottawa’s medical officer of health, and her counterparts at the provincial level recommend tighter restrictions to get transmission under control, Watson said he would respect their advice.

In that vein, he called on residents to consider local businesses in their behaviours. The higher COVID-19 levels rise in Ottawa, the more likely the city will shift into the province’s grey-lockdown zone.

People who host parties at their homes or otherwise flaunt COVID-19 precautions are therefore putting Ottawa’s economy and its small businesses at risk, he argued.

“The future of the lockdown is really in the hands of the people of Ottawa,” Watson said.

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