Commercial ratepayers saw rising property tax rates this year in eight of the 11 major Canadian cities Altus Group surveys for its annual benchmark report, while commercial-to-residential tax ratios widened in all but two of those markets. On average across all the cities, commercial properties were taxed at 2.8 times the rate applied to residential properties, with commercial ratepayers in Vancouver, Calgary, Toronto, Quebec City and Halifax taxed at more than three times the rate for residential householders.
Altus analysts note a general trend of falling commercial values in the markets where reassessments have occurred since the onset of the COVID-19 pandemic, along with municipal governments’ conventional reluctance to shift more of the tax burden to residential ratepayers. Meanwhile, ratepayers in Toronto and Ottawa are still locked into assessments that reflect 2016 market values.
“The post pandemic market is incredibly volatile and governments need to be proactive to address the value shifts without increasing inequities between commercial and residential taxpayers,” urges Kyle Fletcher, president of Altus Group’s Canadian property tax division. “To achieve equitable taxation and to support economic recovery, governments like Ontario’s need to embrace more frequent reassessment to keep up with market changes, and municipalities need to move away from policies that shift a greater portion of the tax burden to commercial properties.”
Nationally, commercial taxes averaged $24.23 cents per $1,000 of assessed value, with Edmonton, Ottawa, Montreal, Quebec City and Halifax all surpassing that average. The average residential tax rate was $9.11 per $1,000 of assessed value. However, the tax rate was higher than the average in a majority of cities, ranging from $9.39 per $1,000 of assessed value in Edmonton to $11.54 per $1,000 of assessed value in Halifax.
This year, the tax shift onto the commercial base was most notable in Calgary, Edmonton and Halifax, which took on an extra 6.5 to 10 per cent share of the tax load compared to 2021. Among the 11 cities, the widest tax gap occurs in Montreal, where the commercial-to-residential ratio stretched to 4:21 to 1 in 2022. The narrowest ratios continue to be found in Saskatchewan, where Regina’s commercial ratepayers are taxed at 1.51 times the residential rate and Saskatoon’s are taxed at 1.61 times the residential rate.
Winnipeg was the sole city to see both a slight narrowing of the commercial-to-residential tax ratio and a nominal dip in the commercial tax rate. For 2022, commercial ratepayers were taxed at 1.92 times the residential rate. A tax rate of $23 per $1,000 of assessed value was down from $23.05 per $1,000 of assessed value in 2021. At the same time, Manitoba’s residential ratepayers were rebated 37.5 per cent of their education property taxes this year, which, Altus analysts calculate, reduced Winnipeg homeonwers’ overall property tax rate to $9.08 per $1,000 of assessed value.
Toronto’s tax ratio tightened 2.42 per cent in commercial ratepayers’ favour — to rest at 3:36 to 1 — but the tax rate nudged up by 0.92 per cent. This year, that translated into $21.22 per $1,000 assessed value, up from $21.03 in 2021. This is the 18th consecutive year the commercial-to-residential tax gap has narrowed, as part of an extended campaign to eventually hit the threshold of 2.5 to 1.
Commercial ratepayers in Ottawa saw a 3.51 per cent increase in the tax rate and a widening of the commercial-residential tax gap to 2.39 to 1. However, the residential tax rate also rose by 2.54 per cent. Meanwhile, Quebec City adjusted the commercial tax rate 0.9 per cent upward and the residential tax rate 0.4 per cent downward, stretching the tax gap to 3.51 to 1.
There was a 4.35 per cent year-over-year decrease in Montreal’s commercial tax rate, pushing it down to $34.66 per $1,000 of assessed value. However, the residential tax rate dropped 5.37 per cent to widen the tax ratio. This is the last year of the city’s three-year assessment cycle so Altus analysts project greater shifts between property classes next year when the new 2023-25 cycle begins.
Alberta’s annual reassessment is deemed a significant factor in this year’s tax landscape in Calgary and Edmonton. Notably, Calgary’s downtown assessment base has shrunk steadily in recent years due to falling office values, and the city has adjusted the commercial tax rate upward to adjust for the loss of revenue. In contrast, there was an 8 per cent year-over-year gain in residential assessment attributed to the city’s strong single-family housing market.
Calgary’s commercial tax rate rose by 6.44 per cent from 2021, for the steepest increase of the 11 cities, while the residential tax rate fell by 3.47 per cent. That translated to commercial tax at $21.93 per $1,000 of assessed value and a residential tax rate of $7.15 per $1,000 of assessed value.
