Municipal Commercial Tax Policy Engagement
Regional Council and community stakeholders have expressed interest about this topic and, as such, staff have commissioned an economic analysis, along with internal analysis and research. In addition to these efforts, an understanding of the commercial sector’s perspective and viewpoints will be critical to an informed deliberation by Council regarding next steps.
A stakeholder workshop was held on Jan. 18, 2018 with members of the commercial sector to garner insights regarding their perspectives of the commercial property tax system in the municipality.
Residents are encouraged to review the policy information package below which reflects a significant amount of work and thought conducted on this topic to date.
Feedback gathered from the stakeholder workshop and the online survey will be used by staff to inform a report to Council, which is expected to be presented later in 2018.
Commercial Tax Policy Information Package
Information presented, and feedback gathered, at workshop: Jan. 18, 2018
- Commercial Tax Timeline: How We Got Here – Staff presentation to stakeholder workshop (Jan. 18, 2018)
- Commercial Tax: Objectives and Options – Staff presentation to stakeholder workshop (Jan. 18, 2018)
- An Economic Analysis of the Halifax Regional Municipality Commercial Tax – CanMac Economics presentation to stakeholder workshop (Jan. 18, 2018)
- Summary of Commercial Tax Workshop (Jan. 18, 2018)
- What We Heard: Commercial Tax Workshop (Jan. 18, 2018)
Commercial Tax - Recommended Reading
- Municipal Commercial Tax Assessment – Halifax Partnership
- Bill 177 – Province of Nova Scotia
- Bill 52 – Province of Nova Scotia
- Commercial Tax Options for Small Business – Staff presentation to Regional Council’s Committee of the Whole (Nov. 10, 2015)
- City Benchmarking: Annual Property Taxes of Class A and B Office Buildings and Industrial Space – Altus Group Ltd (Sept. 2015)
- Commercial Tax Intensity Map for Regional Centre (2014)
- Hiding in Plain Sight: The Harmful Impact of Provincial Business Property Taxes – Commentary by the C.D. Howe Institute
- Study of Commercial Taxes as a Driver for Business Location Decisions – Altus Group Ltd (July 2012)
- Academic Paper: Property Tax Incentives for Business – Lincoln Institute of Land Policy (2012)
How many commercial properties are in the Halifax Regional Municipality?
Per 2017 data, there are approximately 5,300 commercial properties in the region.
What issues have businesses and Regional Council identified as being a problem?
Many perceived issues have been identified, ranging from sudden and dramatic increases in tax bills, excessively high tax per square foot of property, perceived unfairness or arbitrary nature of the system, as well as how closely planning and tax are aligned in the region.
What possible solutions have been proposed?
A variety of solutions have been identified, including phasing in assessment increases, changing valuation metrics away from assessment and reducing the burden of tax on non-residential revenues.
What legislative changes have been enacted to date in response to perceived issues?
Since 2015, the Province has passed two bills, Bill 177 and 52. Bill 52 is an extension of municipal charter powers and gives additional flexibility in how the Halifax Regional Municipality can tax property. Bill 177 is a commercial phase-in tool available to all municipalities in Nova Scotia. It is prescriptive in nature and a model by-law is currently being drafted by the Association of Municipal Administrators Nova Scotia (AMANS).
What role does economic theory play in the presence of the property tax?
Economic theory focuses on the property tax as being a “benefit” tax, meaning providing public goods with services that reduce business costs. It also states the tax on capital, or marginal effective tax rate (METR), if unreasonably high, may have negative economic implications.
The municipality commissioned an economic study, what was the purpose and goal of the study?
Municipal staff commissioned CanMac Economics, an econometric consultancy, to determine optimal changes to the commercial tax structure given current and prospective legislative powers. CanMac’s focus has been on determining the extent to which the commercial tax burden contributes to firm level investment decisions. Known in public finance circles as the Marginal Effective Tax Rate (METR), this is the 'tax wedge' between the before and after tax rate of return on capital.
What work apart from the CanMac study have staff conducted?
Municipal staff have produced internal research and analysis dating back to 2014. In fall 2015, a report entitled Commercial Tax Options for Small Business was presented to Regional Council. This report was roughly 150 pages and attempted to diagnose the policy issue(s), provide possible options, look at what is being done in other cities/ regions, and provide survey results of commercial respondents regarding taxes, business decisions and municipal services. Additional research on commercial tax issues has been on-going since the tabling of the 2015 report.