Halifax to seek provincial OK to change commercial tax system

Halifax will ask the province for authority to change its commercial tax system as municipal councillors seek ways to help small businesses struggling to pay their annual property tax bills.  

"Assessment spikes are causing significant hardship for small business on main street," said Coun. Waye Mason.

"They don't have the capacity of a large business to absorb those spikes when it comes on them suddenly."

Mason asked municipal finance staff last spring to come back with ideas for changes to the commercial tax structure in time for debates on next year's budget.

But a new report says almost every option involves getting permission from the provincial government through legislative changes to Halifax's Charter.  

Some of the possible solutions discussed in the report involve switching to a three- or four-year assessment cycle, or basing commercial taxes on a property's total frontage or a building's square footage. 

A number of councillors were critical of those ideas.

"I think we should have a special tax rate, or different tax rates," said Coun. Gloria McCluskey. "And that would give immediate relief to small business."

That suggestion jives with recommendations made by the Spring Garden Area Business Association, which has called for a small business tax rate as well as a special downtown rate. 

A downtown rate could also support the priorities of the city's development plans for the regional centre, which includes the Halifax peninsula and Dartmouth within the Circumferential Highway.

"We want to densify the core," said Mayor Mike Savage. "To me, we need to determine if the tax system is aligned with the regional plan."

Taxes must come from somewhere

At the moment Halifax can only set urban, rural and suburban tax rates.

"Tax rates are a really strong tool," Mason says. "But right now we can't set different geographies for tax rates ... so we still need legislative change to allow that."

Some councillors are extremely skeptical. They point out if small businesses get a break, someone else will have to pick up the tab.  

"We still need at the end of day the amount of taxation," said Coun. Linda Mosher. "If we lower it on small business it's either going to go on larger business or residential."  

Mosher also pointed out an earlier attempt at tax reform within the Halifax region ended in failure because no one could agree on who should be the winners and losers.  

"After thousands of hours of meetings, research and public consultation ... there was no decision made," said Mosher. 

Halifax finance staff will come back to council for more guidance if the province agrees to give the municipality new taxation powers.