Fix tax rate for small businesses, Tory urges

Mayor tells province fairer model needed after tax bills soar

Mayor John Tory is urging the province to fix the way commercial property taxes are calculated after skyrocketing bills forced some small businesses on Yonge St. to shutter, and others to threaten to follow suit.

The current assessment methodology used by the Municipal Property Assessment Corp. (MPAC) is “often distorted” and does not account for the current use of a property, nor the “undue pressure that its valuations place on tenants,” Tory wrote in an Aug. 30 letter to Finance Minister Charles Sousa.

“We require a fairer model of assessing property taxes for our small businesses and I would encourage you to review options,” Tory wrote. “MPAC is not working when it comes to small businesses in Toronto and I am willing and anxious to work with you to find ways to fix it before more jobs are lost.”

The current model looks at the potential market value of the land and assesses it according to its “highest and best use.” That can mean a mom-and-pop store is assessed at the same tax rate as a nearby glass condo tower.

“The corresponding sticker shock led many businesses to consider closing their doors. Some business did close their doors,” Tory wrote.

John Anderson, president of the Yonge Street Small Business Association, said he is pleased Tory has taken a “first step” — but is not impressed with his timing.

Small businesses started receiving their property tax bills with the dramatic increases in May, so the mayor’s office knew or should have known this was a “very major problem,” Anderson said.

“This was the largest tax increase in the city of Toronto and (Tory) was silent” for too long, he said, adding, “It’s good that he has woken up.”

Anderson’s tax bill jumped from $155,000 to $280,000 for his furniture store, Morningstar, on Yonge St., south of Isabella St. Some small business owners saw their tax bills rise by up to 500 per cent. While Anderson acknowledged that MPAC — an independent, notfor-profit corporation — is accountable to the province, not the city, he said change “requires the mayor and co-operation of the province.”

Tory spokesperson Don Peat disputed Anderson’s contention that the mayor’s office had ignored the issue.

He pointed to an Aug. 2 email, sent to the Star, saying the mayor’s office had asked city staff to examine why the owner of House of Lords hair studio was hit with a steep tax hike, forcing him to close on Oct. 1.

The mayor’s staff also took part in a meeting at city hall on Aug. 18 to discuss the issue, and the topic is on the agenda of Thursday’s meeting with the Toronto Association of Business Improvement Areas, Peat said.

Tory is also sending separate letters to business owners putting the blame squarely on the province’s shoulders.

“These increases are entirely the result of the reassessments that were done by the Municipal Property Assessment Corp. which reflect higher market values observed in the area, and are not the result of tax rates set by Toronto city council,” he wrote.

However, while the city “cannot affect the property assessments,” city staff have been in discussions with MPAC to “strongly register concerns about the growth in property tax bills for businesses along Yonge St.,” he wrote.

MPAC is responsible for assessing and classifying property in Ontario for the purposes of municipal and education taxation. In Ontario, property assessments are updated on the basis of a four-year assessment cycle.