Homeowners are paying an increasing proportion of property taxes in Vancouver and Toronto – but not in Montreal, where businesses are increasingly picking up the tab.
That's the finding of a report to be released Monday by the Real Property Association of Canada, which represents large commercial real estate developers, including real estate investment trusts (REITs), banks and pension funds. The industry argues that business is shouldering too much of the property-tax burden, decreasing the ability of cities to attract companies and jobs.
For now, relatively low interest rates are helping to attract tenants for office and retail properties. But "we remain deeply concerned about the damaging impact that inequitable commercial-residential taxes have on city growth and its ability to attract business and jobs," said Paul Morse, chief executive officer of the industry association. "High realty taxes are a barrier to business growth and in the long run put a choke hold on investment in downtown office, hotel, apartment and retail property development."
Most cities have been cutting commercial tax rates over the last decade, but the report says residential tax rates have declined more quickly.
The industry has been lobbying municipalities for a commercial-to-residential tax ratio of about two to one. Right now, Vancouver, Toronto and Montreal are more than twice as high, about four to one.
The ratio has been on the decline in Vancouver and Toronto, but commercial taxes in Montreal are increasing at an "alarming" rate and that city's ratio will likely vault past Toronto's by next year, the report argues.
On an absolute basis, per $1,000 of commercial assessment, Calgary, Vancouver, Edmonton and Winnipeg have the lowest estimated commercial property taxes, while Montreal, Halifax, Ottawa and Toronto have the highest. At the high end, Montreal's commercial property taxes are estimated at $39.85 per $1,000 of assessment, Calgary's are $16.25, and Toronto's are $31.82
Per $1,000 of residential assessment, Vancouver, Calgary, Edmonton and Toronto have the lowest taxes, while Winnipeg, Ottawa, Halifax and Montreal have the highest. Winnipeg's residential taxes are $12.73 per $1,000 of assessment, while Vancouver's are $4.05, Montreal's are $9.75, and Toronto's are $7.71.
"The cities of Winnipeg and Edmonton raised their [commercial-to-residential] ratio slightly, yet were able to maintain the lowest ranking amongst municipalities surveyed," the report said. "Calgary and Ottawa also made significant improvements to their ratios, while Halifax, falling closer to the average, published subtle reductions to its ratio as well."