Relief in sight? Watson proposes permanent 10% tax discount for small biz

Revenue loss would be offset by 0.68% boost to larger businesses' property tax bills
ByWard Market biz
Small businesses in areas such as the ByWard Market would see "significant" savings under a new tax discount proposed by Mayor Jim Watson. Photo courtesy Ross Dunn/Flickr

Restaurants, mainstreet retailers and thousands of other small enterprises in Ottawa could see their property tax bills fall by an average of up to $1,500 a year under a new city proposal to permanently cut small business taxes by 10 per cent.

Mayor Jim Watson said Friday he’s asked city staff to look at creating a new small business tax subclass that would apply to about 4,700 commercial properties housing nearly 8,000 small businesses in Ottawa. 

The new rules would translate into an annual discount of about $1,000 for a business property assessed at $600,000 that currently pays about $15,000 a year in municipal and education taxes. The savings could rise by an additional $500 if the province agrees to match the education tax discount.

To offset the discount, big-box stores such as Costco and Walmart as well as other larger commercial and industrial properties would see their taxes rise by about 0.68 per cent. The city says that would mean a commercial property assessed at $4 million that now pays $102,000 in municipal and education taxes would shell out an additional $700 a year. 

The proposal comes after the province announced in its 2020 budget last fall that municipal governments would be permitted to reduce property taxes for small businesses should they choose to do so. 

Watson noted the city has few other options when it comes to offering financial relief to pandemic-battered businesses, many of which are barely clinging to life after a year of COVID-19-related shutdowns.

'A rollercoaster ride'

“With limited tools, it allows us to provide some support to these businesses who have really been through a rollercoaster ride of closing and opening for the last 12 months,” the mayor told a news conference.

Under the plan, property owners would be required to pass savings on to tenants or their discount would be revoked. Eligible properties would include most small offices, hotels, mainstreet retail spaces, restaurants, bars, daycares and sports clubs as well as commercial and industrial condos and shopping centres under 15,000 square feet.

The proposal will be presented to the city’s finance and economic development committee in early April and full council later next month. City staff plan to consult with businesses later this year, and Watson said he hopes the province will give the green light in time for the discount to take effect in 2022.  

Local business leaders said the proposal is a step in the right direction. 

Noting that municipalities “don’t have a lot of flexibility in terms of tools that they can employ,” Ottawa Board of Trade CEO Sueling Ching said the city is doing its best to help small businesses make it through a difficult situation.

“There’s no one big silver bullet that the city has access to, but everything helps,” she said.

"There’s no one big silver bullet that the city has access to, but everything helps."

Mark Kaluski, chair of the Ottawa Council of Business Improvement Associations, agreed.

“It’s significant, especially in these times,” said Kaluski, whose organization represents more than 6,400 mainstreet retailers, restaurants and other small businesses. “I do think it will be helpful.”

Also Friday, Watson said the city and the Ottawa International Airport Authority are working to secure millions of dollars in federal funding to pay for an LRT station at the airport. The extension of the Trillium LRT line to the Ottawa terminal is slated to be completed next year, but airport authority boss Mark Laroche recently told OBJ the cash-strapped facility can’t afford to build the station. 

Watson said the city has had some “very positive discussions” with the feds and is confident the funding will come through. He also said local officials are pushing for international service to resume and are lobbying for extended rent relief and extra funding for measures such as rapid COVID-19 testing.

“There’s been a lot of discussion about financial support for the airlines, but airports are in very, very difficult circumstances,” the mayor said, adding he hopes to see some good news in the upcoming federal budget. 

“We want Ottawa International Airport to remain an international airport and to thrive like it was pre-COVID.”

Other measures in the city’s economic recovery plan include cutting rental fees at municipal facilities such as Centrepointe Theatre and the Aberdeen Pavilion by 50 per cent for any events that feature cultural and artistic programming in a bid to boost the arts and tourism sectors.