Commercial property tax ratio remains high in Canada
Commercial property tax rates are almost three times as high as residential rates across Canada, according to Altus Group’s newly released 2018 Canadian Property Tax Rate Benchmark Report.
“Ideally, in a perfect property tax system, the ratio would be one-to-one,” said Terry Bishop, Altus Group’s president of property tax for Canada. “Lower tax ratios are an indicator that cities are balancing the tax load on commercial and residential ratepayers, which is appealing to businesses looking to relocate.
“It helps them create job growth and a more sustainable tax base. Having a lower tax ratio is a good thing for cities in terms of trying to attract new business.”
Property tax is the main source of revenue for Canadian municipalities and is used to fund services such as road repairs, education, recreational programs and public transit.
The annual Altus Group report, for which REALPAC was a supporting industry partner, looked at property tax rates in 11 major cities across Canada. Its findings are used by the two organizations to create dialogue with taxing authorities about tax fairness, influence public policy and promote a healthy business environment for the real estate sector.
Calgary had the largest commercial tax rate increase for the second year in a row, the report indicates, with a jump of 9.48 per cent. That pushed its commercial-to-residential property tax ratio up to 3.06.
Quebec City was close to Calgary with its commercial-to-residential tax ratio increase, with a jump of 7.38 per cent placing a growing burden on its commercial ratepayers. Its commercial property tax rate of $36.09 per $1,000 of assessment was just below that of Montreal, which remains the highest of all the cities surveyed at $37.76.
Vancouver remains the only city with a commercial-to-residential tax ratio in excess of four to one, despite posting the largest decrease of 9.72 per cent. It also had the largest drop in its commercial tax rate at 12.78 per cent. The drop in the ratio can be attributed to commercial real estate values increasing at a higher rate than residential values.
The report also compares residential to multi-residential property tax rates. The findings indicate Ontario renters are carrying a disproportionate burden of property tax. While multi-residential building owners are being taxed equally to homeowners in most of Canada, apartment buildings built before 1998 in Ontario carry significantly higher ratios — with Ottawa at 1.36 and Toronto leading the way at 2.07.