My motion to have City Staff review Ottawa’s commercial property class tax rates was unanimously passed at City Council on April 11. It stemmed from the annual Tax Ratios and other Tax Policies staff report which sought to have Council re-affirm a significant disparity between the different commercial tax class rates.The parking lot and vacant land tax rate is the lowest of all commercial tax rates, approximately a third less than the average commercial class. This means that a small business owner pays a higher tax ratio than the owner of an empty parking lot next door.
At a time when our City wants to invigorate our main streets, encourage small business and intensify within the urban boundary, this tax disparity incentivizes the opposite – empty lots and surface parking.
My motion asks staff to evaluate how such a disparity, which has existed unchanged since amalgamation, meets the objectives of the Provincial Policy Statement, the City’s Official Plan and related policies.
Currently our Official Plan provides direction to “consider how to reduce the amount of land used for parking”. The City’s Transportation Master Plan further outlines how “by effectively managing its [parking] supply and price, the City can influence how people choose to travel and promote a behavioural shift from driving to walking, cycling and transit”. In line with this goal, a recent study on Ottawa’s transit options highlights OC Transpo’s ambitious target of 76 million riders on the LRT by 2031. Achieving this target will go a long way to meeting the City’s aim of 80% below 2012 greenhouse gas emissions levels by 2050.
Harmonizing the parking tax rate will have minimal implementation costs and could positively support these City objectives. The study looking at Ottawa's road congestion and transit options outlines how managing the supply of parking is one of the most effective tools to putting transit on a level playing field. Keeping tax rates artificially low for parking lots means transit has a harder time competing with driving from a cost perspective. Ensuring a level-playing field for different types of commercial uses is an effective tool for helping us meet our transit ridership and green house gas emission targets.
I have requested that potential changes to the commercial tax classes be revenue neutral. Therefore, by increasing the parking lot and vacant land tax rate the City makes room for reductions in the tax rate of other commercial tax classes. I would much rather see a tax benefit going towards a small business than an empty lot.
This could incentivize owners of parking lots and vacant land to develop them into more productive land uses, providing greater intensification and economic benefit to the City.
I expect these benefits are why other large municipalities in Ontario, such as Toronto, Hamilton and London have already harmonized their commercial tax rates. Understanding that Ottawa has its own unique circumstances, my motion requests staff take the next year to thoroughly examine how our commercial property class tax rates can best meet City objectives, reach out and consult stakeholders, and report back to Council with recommendations in time for the setting of the 2019 tax rates. I look forward to having the opportunity to review these updated recommendations and engage in a discussion on how best to align our commercial tax classes for future – smart – growth in our city.