Halifax Chamber Of Commerce Asks For Tax Freeze

HALIFAX – The Halifax Chamber of Commerce has officially asked the city council to freeze commercial property tax for the 2021-22 budget. In its pre-budget submission to Mayor and council, the Chamber said the proposed 1.9 percent increase to the average tax bill would be unfair to small businesses that have struggled during the pandemic.

“A 1.9% increase to the average tax bill for commercial properties would add $817 to the bill,” states the Chamber in its submission. “$817 could be the difference between retaining one part-time employee on minimum wage for almost one month. Put another way, $817 could be the cost of investing in a new technology that could streamline business processes or the addition of new materials or training for employees.”
 
The pre-budget submission raises concerns about how much municipal employee’s wages are increasing, and the pension contributions taxpayers are on the hook for.
 
“Planned Wage and pension increases for 2021 could reach up to $27-million,” it reads. “Already faced with potential commercial and property tax increases to fund the municipalities operations, granting planned salary increases has the potential to further increase the tax burden on businesses and citizens.”
 
“We are still concerned that the municipality’s pension plan did not pass the 2019 Financial Matrix established by the pension committee and that this too may have a significant effect on pension contributions, potentially leading to significant contribution increases for both workers and HRM of up to $25M.”
 
The Chamber’s submission also asks the city council to publicize the cost of service for taxpayers and to lobby the provincial government for more powers over municipal taxation.
 
Currently, Halifax Regional Municipality can only separate taxation based on two broad categories: commercial and residential. Property owners who fit into those two categories pay a tax rate based on whether they reside in a rural, urban, or suburban zone. In a previous interview with Huddle Today, Mayor Mike Savage says he wishes the city could separate small businesses and large companies into different tax categories, but the province has yet to grant this authority to Halifax.
 
The Chamber is also asking the council to cut red tape that makes doing business more difficult in the city. According to the pre-budget submission, the city should keep looking for any outdated, unnecessary regulations that create barriers for business.
 
“In 2019, HRM was only 46% of the way through the by-law review. Right now, as the businesses struggle to make payroll, it would be in everyone’s best interest if some or all the outdated and unnecessary by-laws were reviewed, amended, or discarded,” reads the submission.
 
Others in the Halifax community have suggested the city simply cut spending to replace the need for any tax increase. Many online commentators say the city could delay major development projects until the pandemic is further behind us.
 
Dartmouth Councilor Sam Auston, however, says a tax increase of some form is inevitable. He believes there’s no way to cut enough spending to make up for the revenue.
 
“If we really kind of scrimped, we might be able to avoid an increase in the residential (bills)…but to not have an increase at all this year is not realistic,” said Austin.
 
In a presentation to the council prepared by city CFO Jane Fraser, it is noted that, should Halifax make zero changes to the cost of the average tax bill, the city will lose $10.8-million in revenue. Even if they only increased people’s bills by 0.5 percent (the rate of inflation), the city would lose more $7.8-million. Finding those savings through cuts would be difficult without having a major impact on services.
 
To make matters worse, the CFO notes that the 1.9 percent will likely be unsustainable next year since the 2021-22 budget is balanced thanks to the $31-million Federal Safe Restart fund, which was a one-time payment. Unless other federal dollars arrive next year, that $31-million will have to be made up. The CFO notes that Halifax’s costs are rising at a rate higher than inflation.
 
“Municipal costs go up each and every year, so if you are not going to increase the revenue that you need to cover those rising costs, you’re basically just deferring that to the future,” said Austin. “It’s either that, or you’re going to be cutting services.”
 
Austin also did not find the Chamber’s pre-budget submission very helpful. He said the document is asking for no tax increase but provides no alternative for making up for lost revenue.
 
“They don’t have any specifics of course for what to cut, right? That’s the hard job that we as council have. As a councilor, you actually have to make the choices of what we will do without if we’re not going to collect more revenue.”
 
Austin also pointed out problems with delaying projects that need to be done. At some point, the city will still need to pay for those projects and delaying that could cause a “structural deficit.” Austin also says the biggest rising costs are not for projects but are operational.
 
“The problem is, our rising costs are not one-time items; they’re operational. Salaries are a huge part of HRM (costs); we’re a unionized workforce, the wages go up each and every year and we are obligated to pay that because we have contracts with our staff.”

Derek Montague
https://huddle.today/halifax-chamber-of-commerce-asks-for-tax-freeze/