Provincially mandated taxes are driving out local entrepreneurs

By Joe Cressy

I spend a lot of time in this newspaper talking about the need to build a liveable city. A city that is affordable for all. A city that has the parks and services required to foster inclusive neighbourhoods. A city that takes care of the most vulnerable. And, a city that protects and supports arts and culture, because at the end of the day a city without culture would be a city missing something.

A critical component of a liveable city that has been under threat in recent years is the viability of small businesses and our vibrant main streets. I grew up in the Annex, shopping and eating along Bloor Street West. The same story can be told by residents adjacent to College Street, Queen Street, in Kensington Market, and on Roncesvalles Avenue…the list is endless. However, in recent years rising property values and the corresponding increase in provincially-regulated tax assessments are driving small businesses out of the city.

Here’s how it works.

Under the province’s tax assessment rules, commercial properties are assessed on the basis of “highest and best use”. In other words, a property’s taxes are not assessed on the basis of their actual use and sales, but rather on their potential revenue if they were to change.

Just a few examples help illustrate the problem.

401 Richmond is an arts and cultural hub providing below market rents to more than 150 tenants. It’s a dynamic place that enriches our city. However, its recent tax assessment resulted in a 109 per cent increase based on highest and best commercial use, calculated as if it rented to stores like the GAP and Starbucks.

Le Select Bistro is a French two-storey restaurant on Wellington Street. It’s independently owned and has operated for decades. The owners will soon see their taxes increase from $2,000 per month to $20,000 per month, based on a calculation that defines an 11-storey condominium as its highest and best use.

The list goes on and on: from Kensington Market grocery stores taxed on the basis that they could serve cocktails rather than tomatoes, to a local family-owned music shop on Bloor Street that is currently being taxed as if it were a condominium.

Over the last year, I have heard from many small businesses in our community that this flawed tax model is making it more and more difficult for small and independent businesses to survive. From local grocers and raw food vendors to restaurants across our ward, many have been sounding the alarm regarding the impact large and unexpected property tax increases can have on their ability to stay afloat.

Now nobody is suggesting that small businesses shouldn’t pay taxes. Taxes are at the core of our collective commitment to building a liveable city. Taxes are not a four letter word. They are the cost of city building. However, our taxation system should be fair for all, including the local businesses that make our communities and economy thrive.

In recent years I’ve worked closely with city finance staff to try and find solutions to this growing problem. I am delighted that they have come forward with a recommendation to cap annual tax increases on commercial properties in an effort to support local business across our city. The recommendation calls for a maximum possible increase of 10 per cent over the prior year’s taxes on an annual basis — rather than an undetermined, and often prohibitive, amount for some businesses.

The city’s plan is not a solution on its own. The province’s flawed model of assessing commercial properties on the basis of their supposed highest and best use needs to change.

However, as a city councillor I’m not prepared to sit and wait for that to happen while our neighbourhoods see more small businesses close down. Our new city plan will help.

At the end of the day building a liveable city requires us to imagine the city we want to live in and then implement the policies to make it a reality. For me, a liveable city is one where entrepreneurs and small businesses are successful and located in the neighbourhoods where people live.

Joe Cressy is the city councillor for Ward 20, Trinity-Spadina.

READ MORE BY JOE CRESSY:

FORUM: Looking back on 2017 in Ward 20 (Dec. 2017)

FORUM: Establishing a new Indigenous Affairs Office (Nov. 2017)

FORUM: Toronto — an artistic city (FALL 2017)

FORUM: Address affordable housing (June 2017)

FORUM: Build a neighbourhood (March 2017)

FORUM: Conserving past to enrich future (January 2017)

FORUM: Our dynamic Kensington Market (November 2016)

FORUM: A new central park for Toronto (September 2016)