More than 22,800 small businesses to get a tax break

Business groups are praising the city of Montreal’s 2019 operating budget, which will cut property taxes for many small businesses. “It’s very good news for small businesses in Montreal,” said Martine Hébert, a senior vice-president at the Canadian Federation of Independent Business. “Of course, there’s still work to do, but I think that we have to say bravo today.” The budget will reduce the property tax rate on the first $500,000 of a non-residential building’s evaluation by an average of 10 per cent. Fifty-seven per cent of non-residential buildings are valued at under $500,000, the city said, and will see the full decrease. Buildings valued at between $500,000 and $2.9 million will see an average reduction of 3.2 per cent, while buildings valued between $2.9 million and $3.1 million will see an effect “more or less neutral,” the city said. Buildings valued between $3.1 million and $10 million will see an average increase of 0.8 per cent, while buildings valued at more than $10 million will see their property taxes increase by an average of 1.8 per cent. Slightly more than 22,800 small businesses will see their tax rates decrease, the city said. Most businesses that rent have what’s called a triple net lease. That means they are directly responsible for paying property taxes in addition to their rent, unlike residential tenants whose rent is influenced by property tax rates. Michel Leblanc, the president and CEO of the Chamber of Commerce of Montreal, said his group has been asking the city for years to put concrete measures in place to support small business. “The city has heard us,” he said. While property-tax rates in Montreal are high overall, small businesses are the ones that are suffering, he said, and should be the first priority. The cut to the tax rate on the first $500,000 of assessed value “will be significant for many small business owners on the island,” Leblanc said. Projet Montréal has always supported local businesses, said Mayor Valérie Plante. “We’re continuing with a very strong financial, fiscal measure that we’re very proud of,” she said. Non-residential property taxes in Montreal were the highest in the country in 2018, according to a report by real estate focused consulting firm Altus Group, and were 3.78 per cent higher than residential rates. The new differentiated tax rates are part of an effort to reduce that gap, the city said. Between 2020 and 2023, non-residential tax rates will increase at a rate 25 per cent slower than residential properties, according to the budget. “This is going to correct the inequity that we have right now over time,” Hébert said. While the budget shows that the administration is listening to businesses, André Boisclair, the CEO of the Urban Development Institute of Quebec, which represents the commercial real estate industry, said there are still challenges for some small businesses. Many small businesses in downtown Montreal are seeing their property-tax rates rise as a result of increasing property values, and for small business owners, those increasing property values don’t necessarily translate to an increase in traffic at their store, he said. The city still expects the overall non-residential property-tax burden to rise by an average of 1.3 per cent in 2019, the municipal administration said. This is the fourth budget in a row where non-residential property taxes have risen less than residential property taxes. The overall average non-residential property-tax burden in LaSalle, L’Île-Bizard—Sainte-Geneviève, Montréal-Nord, Pierrefonds— Roxboro, Plateau-Mont-Royal, Rivière-des-Prairies—Pointe-aux-Trembles and Rosemont—La-Petite-Patrie will decline. The biggest drop is in Montréal-Nord, where non-residential property taxes will drop by an average of 1.99 per cent. The largest increases will be in Ville-Marie, where non-residential property taxes will increase by 2.53 per cent and in the Sud-Ouest, where they will rise by 2.53 per cent. The inflation rate in the Montreal Census Metropolitan Region was 1.8 per cent in September, according to Statistics Canada. The city plans to spend $5.2 million to compensate businesses affected by construction, part of a multi-year $25-million program announced in the summer. The details of the program will be announced on Nov. 14, Plante said. The aid will be retroactive to 2016 but will only be available to businesses that are still operating. Municipal opposition leader Lionel Perez said the city has moved too slowly on compensation.