Halifax moving commercial tax burden to business parks

Halifax's new commercial tax system will shift the burden to business parks so big-box stores pay more, but it's possible small businesses will get caught up in the change.

During a budget committee meeting Wednesday, city staff gave council an update on what the new zone-based tax system with tiered rates could mean for this fiscal year, since the new rules come into place April 1.

Municipal commercial taxes in three of the parks — Dartmouth Crossing, Bayers Lake and Bedford Commons — will be the highest and would go up by $5 million overall, while the other zones would see reductions. 

"We're shifting it to those who can afford it, and those who can spread it around," said Coun. Shawn Cleary.

Councillors noted that changing property tax rates is the only tool they have to make national chain stores pay more, and until now the existing tax system has weighed heavily in their favour.

Coun. Sam Austin said the current tax system contributed to decades of businesses moving from the urban core to the city's edges where land value was lower.

"This is a small measure to try and right-size a little bit of that," Austin said.

But city staff noted that the changes could see increased taxes imposed on small businesses who are also tenants in the parks.

Beverly Hynes, who owns Seamus David's Pub in Dartmouth Crossing, said the changes come as inflation has her grocery and power bills going "through the roof."

"We've been through enough," said Hynes, who has been in the park for 11 years. "We're up amongst a bunch of big businesses, and [we're] just a small little fish trying to make our way." 

It's unclear what the final impact on small businesses in the parks will be, but staff noted that the highest tax jump for an individual property is $283,000 in Dartmouth Crossing, which has smaller shops in it like 2 Doors Down and Coconut Creek Gift Shop.

However, Cleary said given that the property is 11 hectares, has eight buildings overall, including a mid-rise, and dozens of businesses, the costs for tenants hopefully won't be too much.

The downtown community zone would save the most, and see taxes decrease overall by $4.2 million. The staff report said the most tax any one property saves in any zone is $4,500.

Paul MacKinnon of the Downtown Halifax Business Commission said it's the equitable thing to do.

He said since chains like Walmart or Costco have national pricing strategies, the business parks they are in can usually weather tough economic times. MacKinnon also said cities like Toronto have taken this step.

"We know that businesses in downtowns and main streets were more impacted by COVID-19 … so we think the time is right for this kind of shift," MacKinnon said.

When asked about small businesses in the parks being affected, MacKinnon suggested having the province grant Halifax new powers to allow for certain exemptions.

Halifax has already asked the Nova Scotia government to pass a bylaw that would allow them to phase in the tax changes over three years, and avoid a painful spike this year.

While the province hasn't granted that yet, Mayor Mike Savage said Wednesday he's spoken with Municipal Affairs Minister John Lohr, who has agreed to talk with Halifax city staff "to see if we can work this out."