In April, Regional Council directed staff to consider commercial tax measures that would address concerns specific to small and independent businesses in the central business district (Downtown Halifax/Dartmouth) and main street and commercial corridors. Last Friday, staff submitted their report, and Council will discuss it this Tuesday. Unfortunately, the report’s two recommendations do essentially nothing to address concerns faced by Halifax’s small business community, nor its downtown.
There has been a lengthy discussion about commercial tax fairness for many years by business groups such as the Chamber of Commerce, Canadian Federation of Independent Business, and the city’s eight business improvement districts (BIDs), including the Downtown Halifax Business Commission. It is fair to say that, as everyone’s idea of “fairness” is subjective, and typically slanted towards their own constituents, there have been areas on which these groups have not agreed. Tweaking of the commercial tax system would also likely have some impact on residential taxes, so it’s also the concern of the city’s 410,000 residents, and their councilors.Tax reform, as the report correctly points out numerous times, is hard. Tax revenues are like air in a balloon: squeeze it on one end, and it’s going to pop up somewhere else.
However, that is no excuse for the lack of direction in this report. If Council merely accepts the recommendations and then moves on, thinking they can check commercial tax reform off their list, they would be mistaken.
There is good analysis scattered throughout the voluminous report, but it’s never tied together, and much of it is inexplicably dropped in the recommendation phase. The best instance of this is section (i), found on page number 22 (which is page 79 of the report). It is an important section, and makes the case that the city could tie its tax policy to broader economic or planning objectives. It cites examples where other cities have created economic development zones, and used tax policy to help direct business to those zones. Essentially, the city could incentivize business location, through lower tax rates, to those areas where assessments are higher; where servicing is more efficient; and which the city has already indicated are priorities in both their Economic Strategy and Regional Plan. Downtown is certainly one of those areas. Traditional main street retail and Burnside industrial uses could also benefit from this sort of tax structure.
This city and this business community deserve more than an analysis produced over a few months by the Finance Department. Given the lack of solid direction, it is not surprising that the end result is ineffective.
Tax policies, because they are controversial, need to flow out of solid objectives the city wants to achieve. Let’s establish those objectives (a growing employment base downtown could be one) and create the tax system that supports it.
Downtown Halifax Business Commission