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FORUM (MAY 2017): No relief for small business

May 26th, 2017 · No Comments

TABIA argues for tax fairness across Ontario

By John J. Kiru

In 1998, Ontario took over school boards’ authority to set property tax rates. Residential education rates were immediately equalized across the province and an advisory panel recommended moving quickly to equalize business education tax rates as well. It is now 19 years later and Ontario has failed to adopt this recommendation to provide tax fairness to businesses across the province, although the current government has repeatedly promised to do so once the deficit was eliminated.

“The province uses an arcane rate-setting system that arbitrarily burdens some jurisdictions over others for no added benefit or service.”

The province uses an arcane rate-setting system that arbitrarily burdens some jurisdictions over others for no added benefit or service. Remember, the education tax is now a general revenue tax, just like the corporate income tax.

That means a dollar less in education tax is offset by a dollar more in provincial grants, keeping total school board funding at the targeted level.

Businesses taxed at a higher rate than others receive no added benefit. Consider that:

  • A Toronto business property worth $5 million pays $15,500 more annually than it would in Halton Region — a 34 per cent premium for no added benefit or service
  • ?London, Waterloo, and Windsor businesses pay some of the highest rates in Ontario and pay 61 per cent more than Halton Region for no added benefit
  • 5.3x ratio of commercial-to-residential education tax rates for Toronto as applied by the province
  • 7.5x ratio of commercial-to-residential education tax rates for London, Waterloo, and Windsor as applied by the province.

The Province of Ontario succeeds when its businesses succeed. When choosing where to locate or expand a business, our province has a lot to offer in terms of an educated and talented workforce. The next step is showing businesses a commitment to long-term economic competitiveness, which includes a stable, business-friendly tax environment.

John J. Kiru is the executive director of the Toronto Association of Business Improvement Areas (TABIA).

 

Tags: Annex · Letters · Opinion