Three Toronto councillors called upon the Ontario government on Monday to release regulations that would enable big cities across the province to provide tax relief for small businesses.
Coun. Kristyn Wong-Tam, Mike Colle and Ana Bailão told reporters that time is running out to give small businesses a break for the 2021 tax year. The regulations, which would allow the city to create what is called a new small business property subclass, are needed now before the city votes on its $14-billion operating budget on Feb. 18.
At a special meeting on the budget, the city must provide direction to staff about tax reform in the 2021 tax year. The regulations are needed no later than Feb. 11.
Wong-Tam, who represents Ward 13, Toronto Centre, said the pandemic has created “all sorts of havoc” for small businesses, which include local restaurants, bars, specialty shops, independent retailers and main street storefront operations.
“Over the past year, what we’ve seen is an alarming number of businesses literally collapse due to the financial hardship of people being asked to stay home because it’s unsafe for them to go out,” she said at a news conference.
“We need the province to release the provincial regulations that outline the details on how to get this done as soon as possible. The clock is literally ticking.”
One in six small businesses in Canada will potentially close because of the pandemic, according to a survey by the Canadian Federation of Independent Business.
Main streets are feeling the “financial crunch,” Wong-Tam said.
“The financial relief that we can offer small businesses this year is very clear. And city council has an opportunity to respond to the need in the community, but we need to have this tool provided to us by the province,” she added.
Regulations already drafted, councillor says
Wong-Tam said the government has drafted the regulations and was about to release them before former Ontario Finance Minister Rod Phillips abruptly resigned on Dec. 31. Phillips took a holiday trip to St. Barts while most of the province was told to follow public health guidance to stay home.
In the Nov. 5, 2020 provincial budget, Phillips said the province would allow cities to create a new small business property subclass to provide tax relief.
Wong-Tam said she has been told that the government could release the regulations at any time. She said city council will consider a motion on the matter at a meeting this week.
Colle, who represents Ward 8, Eglinton-Lawrence, said his ward has lost 150 small businesses since the pandemic began. He said the tax reform is overdue because small businesses are taxed as if they are condos.
“This is urgent. The province was good enough to enable us to do this with the regulations, but they have not released the regulations. The province has to release the regulations as soon as possible and then the city can therefore proceed,” Colle said.
“All of these jobs lost, doors closed, from Keele Street to Avenue Road. We can’t wait for another year or two to make these changes to keep small businesses alive. This change is needed urgently.”
‘The stress, the pressure, the hardship is real’
Bailão, who is deputy mayor and represents Ward 9, Davenport, said small businesses are integral to the communities that make up Toronto. Before the pandemic, many were already struggling with the impact of current value assessments on their properties and increases that resulted in higher levels of property tax.
“They bring jobs, vibrancy and life to our main streets,” she said. “The stress, the pressure, the hardship is real.”
Other cities, including Ottawa, Hamilton, and other regions, include Peel and Waterloo, are also calling for the release of the regulations, according to Wong-Tam.
Finance ministry says it will notify municipalities soon
In a statement on Monday, the Ontario finance ministry acknowledged that the province said in 2020 that municipalities will be able to provide a property tax reduction for eligible small businesses through the adoption of a new optional small business property subclass, beginning in 2021.
“An amendment to the Assessment Act has been passed, which now allows municipalities to define small business eligibility and set the discount based on their local needs and priorities through a municipal by-law. The Province will also consider matching these municipal property tax reductions in order to provide further support for small businesses,” the ministry said.
“The Ministry is consulting with municipalities, including Toronto, on implementation and will notify all municipalities soon when the regulation implementing the subclass is filed.”
According to a news release, each municipality will be able to define what is a small business and will be able to use geographical, business or property features to determine the definition.
The release said the new small business property subclass would stimulate economic growth and job creation once the pandemic eases.