Waterloo business owners are paying more than their fair share of Ontario's controversial Business Education Tax (BET), according to John Kiru, executive director of the Toronto Association of Business Improvement Areas (TABIA).
He heads the umbrella group of Toronto-area businesses calling on the government to equalize how commercial properties are taxed across the province.
"Some would call it the most inequitable tax in Canada," Kiru told CBC News. "Somebody literally across the street pays a different tax than somebody [else],"
Some would call it the most inequitable tax in Canada... - John Kiru, executive director of the Toronto Association of Business Improvement Areas
Kiru's call comes following a report that shows Waterloo businesses face the highest discrepancy of any municipality in the province, amounting to $5,500 more per million dollars than if they were located in the Halton region. The report was prepared by economics researchers Peter Tomlinson of University of Toronto and Adam Fount of Trent University.
The amount of education tax that a business is required to pay is based on rates determined by the province, applied to the value of commercial properties. When education came under the auspices of the provincial government in the 1990s, the cost paid by each municipality was factored into the formula. At that time, Waterloo paid more than other regions in the province. But even as education costs have changed, Kiru says, business owners in Waterloo continue to pay more than other regions.
Province acknowledges 'wide variation in BET rates'
"It's a moment in time when education got brought under the province's wing, that discrepancy of what each municipality used to do still continues," he said.
Now, as the end of the fiscal year approaches, Kiru argues the government should remove the tax inequity as part of the upcoming provincial budget.
The Ministry of Finance told CBC News that municipalities transfer the education portion of property taxes directly to local school boards. But it acknowledges the discrepancy in education costs between municipalities and says it has taken "significant steps to address the property tax burden on Ontario business and reduce the wide variation in BET rates" over the years.
Among those steps:
- Newly constructed properties are eligible for reduced BET rates.
- The highest BET rates have been cut by more than 50 per cent.
- Average BET rates have been cut by more than 30 per cent since 2007.
But Kiru says that's not enough.
"When the province speaks about competitiveness and competitive advantage and trying to attract business to establish in Ontario, this discriminant tax that they put in…. works totally against that," Kiru asserted.
'Hurting small business more than anybody else'
And while Waterloo business owners face the highest discrepancy, Kiru says other major municipalities including Toronto, London, and Hamilton also pay more significantly more than others. "This is province-wide issue… this is not Toronto-centric," Kiru said.
"This is hurting small business more than anybody else at a time when small business is under duress," he said. "How can they preach about equality about the province when they do this?"
The ministry says it cannot speculate on what will be in the budget. "Nor do we speculate on tax policy and this would include speculation on the application of the BET," ministry spokesman Scott Blodgett wrote in an email to CBC News.
However, he said the government will review all of its policies as part of the budget development process to make sure the document it puts forward is the best plan for Ontario.
In the meantime, Kiru says, businesses in one part of the province continue to pay more than others, for no clear reason.
"These inequities continue until we collectively as municipalities across the province approach the Ministry of Finance and the premier and talk about equality," said Kiru.