Commercial tax rates in Toronto and Montreal continue on inverse trajectories even though ratepayers in both cities carry a disproportionately higher share of the overall property tax burden than do their peers in most other major Canadian cities. At the other end of the scale, Saskatoon and Regina boast the most equitable split.
Newly released results of the Real Property Association of Canada’s (REALpac) annual property tax survey reveal that Montreal, Vancouver and Toronto once again have the widest commercial-to-residential tax ratios, with commercial properties in Montreal taxed at a rate nearly 4.5 times greater than that applied to residential. The average commercial-to-residential ratio across the 10 surveyed cities was 2.79-to-1.
“Tax fairness nationwide is a core pillar of REALpac’s policy agenda. Excessive property taxes on commercial and industrial properties will make Canadian cities less competitive and ultimately reduce the property assessment base and jobs,” maintains REALpac’s chief executive officer, Michael Brooks.
This year marked the 10th consecutive year that Montreal’s commercial-to-residential tax ratio has increased in the 11 years since REALpac launched the survey in conjunction with its research partner, Altus Group. Toronto’s ratio has steadily decreased in the same period, registering at 4.01- to-1 in 2014, as the city administrators press toward the stated goal of lowering the ratio to 2.5-to-1 by 2020.
Edmonton and Halifax were two other cities to see notable decreases in their ratios. Edmonton’s ratio dropped from 2.33-to-1 in 2013 to 2.25-to-1 this year, while Halifax’s ratio dropped from 2.94-to-1 to 2.81-to-1.
The survey also calculates estimated commercial and residential taxes per $1,000 of assessed value. By this measure, commercial ratepayers in Montreal, Halifax and Ottawa had the highest payout, and Toronto and Winnipeg were also above the average of $24.25 per $1,000 of assessment.
Notably, Montreal reaped $37.12 per $1,000 of commercial assessment versus $8.27 per $1,000 of residential assessment. Calgary, which sits midway among the 10 cities with a commercial-to-residential ratio of 2.31-to-1, collected $14.11 per $1,000 of commercial assessment compared to $6.10 per $1,000 of residential assessment.
Commercial ratepayers in Toronto paid $29.98 per $1,000 of assessment. Meanwhile, residential ratepayers were taxed at $7.23 per $1,000 of assessment — less than the average of $9.51 per $1,000 of residential assessment across the 10 surveyed cities.
Vancouver recorded the second highest commercial-to-residential tax ratio at 4.33-to-1. Yet, reflective of the city’s property values, that translated into a lower tally per $1,000 of assessment than in most of the surveyed cities.
Commercial ratepayers paid $15.91 per $1,000 of assessment, while residential taxpayers paid $3.68 per $1,000 of assessment — a stark contrast to homeowners in Regina and Saskatoon, who paid $13.69 and $12.58 per $1,000 of residential assessment respectively.
Even when accounting for widely varying property values among some of the surveyed cities, Saskatoon and Regina’s narrower commercial-to-residential tax ratio is also a significant factor. Saskatoon is committed to maintaining the 1.4-to-1 ratio, which was the lowest among the cities, while Regina’s was second lowest at 1.56-to-1. Commercial ratepayers in Saskatoon paid $17.62 per $1,000 of assessment, while their contemporaries in Regina paid $21.37.
“Most Canadian cities have extended the ongoing trend of decreasing commercial tax rates to promote business growth, but residential taxes have continued to decline over the past 11 years at a faster rate than commercial tax rates,” the introduction to this year’s survey results states.