City mulling new tax class for small businesses

·2 min read
The City of Ottawa is looking at giving small businesses hammered by the COVID-19 pandemic a tax break. (Andrew Lee/CBC - image credit)
The City of Ottawa is looking at giving small businesses hammered by the COVID-19 pandemic a tax break. (Andrew Lee/CBC - image credit)

The City of Ottawa will spend the summer consulting about a new property tax discount for small businesses.

The city's finance and economic development committee approved a framework for the new tax category on Friday.

In the provincial budget tabled last month, the Ontario government is allowing municipalities to create a new tax subclass for small business property owners, allowing them to pay a lower rate than their larger counterparts.

Ottawa jumped on the opportunity. The plan is to give owners of small business properties, which the city defines as 15,000 square feet — think single-storey retail, daycares, motels, even modest industrial parks — a 10 per cent discount on their municipal property taxes.

A little more than one-third of business properties in the city would be eligible for a discount, while larger property owners will be taxed at a slightly higher rate to make up for the shortfall.

The province has also pledged to pick up the tab for a portion of the education taxes that small businesses pay. For example, the owner of a business property assessed at $600,000 could get a tax break of as much as $1,500.

<cite>(City of Ottawa)</cite>
(City of Ottawa)

The measures are in response to the COVID-19 pandemic, but the tax discount would be permanent.

"This is a good example of big business helping small business," said Mayor Jim Watson, who chairs the committee.

"A lot of the big businesses recorded significant increases in profits. Walmart, Costco, Amazon — they did very well and they're continuing to do very well during the pandemic. It's the small businesses, mostly family owned, that are having a very, very difficult time. So we're asking those big businesses, those large corporate citizens, to pay a little more so that the small businesses can pay a little bit less."

Ottawa's chief financial officer, Wendy Stephanson, said the city is still waiting for the province to release regulations for the new subclass, which will include technical details of how the measures can be implemented. The province has also suggested it may match any municipal discount on property taxes, but that has yet to be confirmed.

City staff will consult with residents this summer about the plan to make it as equitable as possible. For example, they'll look at whether there's a way to ensure that any savings are passed on tenants of the building.

A final report on the new tax class is expected later this summer, so the new tax rules can be in force by 2022.