Business owners worried about Toronto property tax hike

Megan Munroe is struggling with how her family will handle the increase in property taxes in Toronto with three young daughters at home.

“Just really disappointed and shocked,” she said in an interview with CTV News Toronto. “I mean, it’s another increase for families.”

She and her husband are also small business owners. Munroe runs a gift shop called Caribou Gifts in the Junction and will also be affected by the commercial property tax increase.

“We’re feeling it from all angles,” Munroe said.

Mayor John Tory released his budget proposal Tuesday, which includes a 5.5 percent increase in residential property taxes. This does not include the already approved increase in the construction fee of 1.5 percent, bringing the total increase to seven percent. The increase in the tax on commercial real estate in the budget proposal amounts to 2.75 percent.

“The main priority I had was to book the front lines,” Tory said. “What they don’t read about are the cuts in the first services because we take care of them.”

Munroe said the weather was terrible, with inflation causing the price of everything from fuel to groceries to soar.

“Our grocery bill has gone up, it has to be 25 percent or more,” she said. “We know our customers are feeling the inflation and all these increases, which of course affects their spending in our store. Now we’re affected at home and at work.”

“I don’t think we’re going to see a lot of consumer confidence for quite some time,” said Alison Kemper, an associate professor at the Ted Rogers School of Management.

In an interview with CTV News Toronto, she explained that there are a range of global, provincial and municipal impacts affecting supply chains and consumption left over from measures taken during the pandemic.

“For the last 20 or 30 years, the provincial government has taken on more responsibility for costs that don’t vary that much from year to year, while the city has to deal with very volatile costs and there aren’t a lot of new ways to generate revenue to match those costs,” Kemper said. .

“This means that taxpayers, who are almost all residential and commercial taxpayers, have to deal with the failure of some higher levels of government to, for example, provide adequate housing.”

Property taxes are based on a home’s assessed value, not market value, explained Toronto real estate agent Steve Jelenic. He suggested that the reason this is happening now is because of the decline in housing sales.

“Toronto is the only city in Ontario that has a municipal land transfer tax and a provincial land transfer tax,” he said, “so the city loses out on millions in revenue generated when the number of properties bought and sold drops significantly.”

City councilors and experts also point to the fact that property taxes have been artificially kept low during Tory’s tenure, so it’s high time there was a significant increase.

“Toronto actually has the lowest percentage of the assessed value tax rate of any city in Ontario,” Jelenic said, adding that assessed value is typically about 60 per cent of actual market value.

But Jelenić said that “any increase in taxes is not welcome news for citizens, especially when inflation is high and interest rates have risen.”

What’s even more insulting to Munroe is that the holiday season, usually considered crucial for retail businesses, was not what she had hoped for.

“I’ve never seen as many small businesses close as I’ve seen lately,” Munroe said. “So many retail stores are choosing to close their doors after a bad holiday season.”

Mother of three Megan Munroe is seen with her family in this undated photo provided to CTV News Toronto.

Kemper said it’s a really tough time to be a retail business person in an Ontario municipality, adding that “the incredibly high business tax rates in Ontario’s municipalities pretty much threaten the viability of small businesses.”

Munroe said her store did well through the holiday season, but she returned to work when her youngest was just two weeks old to ensure the holiday season ran smoothly.

“I think for most families in the city, it’s going to be very difficult to manage all these changes at once.”

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