Small businesses say municipal taxes unfair

Nadya Bell
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Report shows businesses pay up to three times more than residents

Bradley George, director of provincial affairs for Newfoundland and Labrador with the Canadian Federation of Independent Business (CFIB), released a report Tuesday by the CFIB regarding taxes charged to small business. Photo by Joe Gibbons/The Telegram

The municipal tax system in Newfoundland and Labrador is unbalanced and unfair towards business owners, according to a report released Tuesday by the Canadian Federation of Independent Businesses (CFIB).
Bradley George, CFIB's director of provincial affairs, Newfoundland and Labrador says it decided to release the report as the province marks Small Business Week.
"Why should business owners have to pay more than residents, really? They receive less services. You receive garbage collection, you receive snow clearing, yet many businesses have to pay for garbage collection and snow clearing," George says.
In the report, he says it found that in the city of St. John's for every tax dollar paid by residents businesses paid $3.25. In Labrador City the difference is higher, with businesses paying $3.78 for every dollar of residential tax.
To calculate the difference in tax burden, the report compared the personal municipal taxes and the business taxes paid for an average restaurant.
Gander turned out to be the most business friendly in terms of having the smallest gap between residential and business taxes. Deer Lake and Grand Falls-Windsor also have taxes that are less than twice as high for businesses.
In most of the province's larger municipalities, businesses pay more than double the amount of municipal taxes residents pay.
The city of St. John's was unavailable for commen Tuesday afternoon.
"What we want to see is a more equitable tax regime," George says, "First of all government must cap these tax gaps, we can't see them get bigger. Then it must develop a plan to start narrowing the gap, addressing that immediately."
George says they would like to see the provincial government step in and legislate how much more businesses should have to pay in municipal taxes.
The preferred method for reducing the tax burden, George says is eliminating an extra business tax in municipalities.
He says Newfoundland and Labrador is the only province that has a business tax in every municipality, while most have eliminated the tax, or like Nova Scotia, are in the process of phasing it out.
As a way of making up lost revenue, cities should switch to a user pay system for many residential services, George says.
"We have recommended that municipalities adopt a user-pay service, this is where I'm not going to be very popular, but the user fees provide consumers with a choice to pay for a particular service," he says.
The tax is a barrier to businesses creating jobs and increasing wages, George says.
"We asked business owners, 'What would happen if you lowered the tax burden on business? They say, 'We would increase jobs, we would increase wages.' They need to look at this problem and saythe business tax is an administrative headache, it is a further tax on business that by addressing this we could invest in job creation," he says.
The theme of the province's Small Business Week this year is, "A world without boundaries, open to new markets."
But for George, many of the issues are close to home. The gas tax, shortage of labour, and complicated accounting procedures used for calculating workers' compensation are other issues the CFIB is working on for small businesses.
nbell@thetelegram.com

Organizations: Canadian Federation of Independent Businesses

Geographic location: Newfoundland and Labrador, St. John's, Deer Lake Nova Scotia

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  • tom
    July 02, 2010 - 13:10

    mr.george it is about time this was made as major issue.look at the fight for donovans industrial park it is was set up originally to attract business with a low tax rate.then it was turned over to mt.pearl.without this tax base mt.pearl would be running to stjohns to take them over.they would not be able to afford the tax rate to run their town.they got another gift from the nfld tax payers when the housing corp gave them all their land for next to nothing for their latest industrial expansion.that gift came from the rest of the prov. look at terra nova if you want to set up a business.the lowest taxes and some big business have done so.

  • tom
    July 01, 2010 - 19:45

    mr.george it is about time this was made as major issue.look at the fight for donovans industrial park it is was set up originally to attract business with a low tax rate.then it was turned over to mt.pearl.without this tax base mt.pearl would be running to stjohns to take them over.they would not be able to afford the tax rate to run their town.they got another gift from the nfld tax payers when the housing corp gave them all their land for next to nothing for their latest industrial expansion.that gift came from the rest of the prov. look at terra nova if you want to set up a business.the lowest taxes and some big business have done so.