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Canadian commercial properties carry disproportionate tax burden: report

DCN News Services
Canadian commercial properties carry disproportionate tax burden: report

TORONTO — A new report reveals that in eight of the 11 cities surveyed, commercial tax rates are at least double those of residential tax rates, which indicates a commercial property would incur property taxes more than twice the amount of an equally valued residential property.

The 2018 Canadian Property Tax Rate Benchmark Report, which provides an in-depth look at property tax rates in 11 major Canadian urban centres, was recently released by Altus Group Limited in partnership with the Real Property Association of Canada. For the 11th consecutive year, Vancouver, Toronto and Montreal posted the highest commercial-to-residential ratios in the country. However, Calgary and Quebec City saw the highest ratio increases in 2018, indicating a growing burden on commercial rate payers in those cities, states an Altus Group release.

For the first time in 14 years, Calgary ranks above the average ratio. Quebec City’s ratio has been steadily climbing for 15 years. For at least the 19th consecutive year, Vancouver remains the only city with a commercial-to-residential tax ratio in excess of 4:1, even despite posting the largest decrease of 9.721 per cent.

Vancouver saw a decrease in commercial tax rates in 2018 with the largest drop of all the cities surveyed at 12.7 per cent for the 13th year in a row, however, given Vancouver’s high commercial property assessments, significant pressure is being placed on businesses. Despite this decrease in the commercial rate, Vancouver continues to post the highest commercial-to-residential ratio. Instead of further balancing the commercial-to-residential ratio, Vancouver introduced new property taxes targeting foreign buyers and high-value properties which broadens their tax base, the release states.

Conversely, Calgary saw the largest increase in commercial tax rates in 2018 for the second year in a row, with a jump of 9.4 per cent. As the downtown office market continues to struggle with high vacancy, the city is experiencing a drastic shift of tax liability towards the commercial tax base, opposed to the residential tax base which has resulted in industrial and retail properties seeing unprecedented tax increases over the last four years in Calgary.

Quebec City has one of the highest estimated commercial taxes per $1,000 of assessment at $36.09, just below Montreal which remains the highest of all cities surveyed at $37.76. According to the release, one factor contributing to the high commercial tax rates in Quebec is the lack of specific taxes on services such as water, which many other Canadian cities charge to offset high property taxes. While the commercial-to-residential tax ratio in Quebec City has increased steadily since 2003, including a jump of 7.380 per cent this year, Quebec’s residential property tax rate experienced the largest drop in rates anywhere in Canada in 2018 with a decrease of 7.4 per cent.

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