Building a business base
It can play out one of two ways in Newfoundland and Labrador. If you’re a larger municipality with several communities nearby, you will likely have a thriving business community.
For other municipalities, holding onto businesses may prove to be more of a challenge.
Either way, the fact remains the same — businesses benefit the affairs of a town.
“It’s extremely important,” said Churence Rogers, president of Municipalities Newfoundland and Labrador, “because the vast majority of our municipalities are small towns that have no businesses based (there), and because of that they have to depend entirely on their residential property tax, and that poses a real challenge because that’s your only real source of revenue.”
In Gander, revenue generated for the town from commercial taxes has been close to equal the amount of residential tax revenues for years. Last year marked the first time in its last five budgets that residential property tax revenue exceeded non-residential tax as a percentage of the budget — 43.1 per cent versus 41.6 per cent.
We’re always are very mindful of the fact that small businesses in the community are creating jobs. We don’t want to set a level of taxation that forces them out of business.
Churence Rogers, president of Municipalities Newfoundland and Labrador and mayor of Centreville-Wareham-Trinity
“You can see with us traditionally, going back through the years, it’s almost an even split between the non-residential and the residential, so they sort of have a symbiotic relationship in that we need one to keep the other going,” said Deputy Mayor Zane Tucker, who chairs the town’s economic development committee. He is also the sales manager for a used car dealership in Gander.
In its 2012 budget, the total value of business and commercial taxes in Gander amounted to over $4.4 million. The town operated with a budget of $12.7 million that year.
“Gander has a pretty healthy business community and a very large chamber of commerce. We rely on it, as you can see there, as a big portion of our tax dollars.”
Tucker cannot imagine how the community would function without its business community. He said it surprised him to learn that some of the bedroom communities on the outskirts of St. John’s do not have many businesses generating tax revenue for municipal government.
“It struck me as really unique. I just assumed most towns relied, like we do, on residential and non-residential, ’cause where we have such a busy little commercial area, I can’t imagine if a lot of that was wiped out from a taxation point of view, because then the burden would be shifted to the homeowners.”
Within the last few years, Kent Building Supplies has opened a store in Gander and the Gander International Airport Authority has been involved in a process that could see half a dozen retailers set up shop near the airport.
Tucker said the town has also been talking with the federal government about obtaining land for commercial purposes, as there are concerns Gander may begin to run low on such property within the next five years.
Rogers — himself the mayor of the smaller municipality of Centreville-Wareham-Trinity in central Newfoundland — says growth in larger municipalities can affect neighbouring communities.
“A lot of the people in smaller communities have to commute to larger centres for shopping. … As a result of that, the business sectors in many small municipalities just barely survive and don’t have a whole lot of dollars that they can pay in terms of high property taxes or business tax.”
Encouraging businesses to set up in small communities gets more difficult the further you are from the Trans-Canada Highway, according to Rogers. Many councils in rural regions focus on their tourism strategy to help sustain service-related businesses like gas stations and restaurants, he said.
Centreville-Wareham-Trinity, with a population of over 1,100, does have a number of businesses in the community, including some with employment numbers in the double-digits.
“We’re always are very mindful of the fact that small businesses in the community are creating jobs,” said Rogers. “We don’t want to set a level of taxation that forces them out of business.”
He said it is hard for retail businesses to operate in his community given that Gander is only a one-hour drive away.