Lopsided tax burden falls heaviest on commercial property owners

In the rural community of Doaktown, Bruce the Moose has greeted visitors outside the B&L Restaurant and Convenience Store on Main Street since 1984.

B&L is a modest local business but comes with a big city property tax bill: $15,053. 

Lottie Storey, the owner, said it is one of her businesses's largest expenses and a constant struggle to pay.

"We have a hard time coming up with that every year," she said.

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"In this rural community, it is hard to do enough business to raise that kind of money."

Although some New Brunswick landowners enjoy lucrative deals on their property taxes, most don't, a CBC News investigation into special tax breaks has found.

Among highest in Canada

Commercial property owners in New Brunswick face some of the highest tax rates in Canada and were one of the first groups tapped for more money when the Gallant government took office two years ago.

The commercial property tax rate in Doaktown is $42.38 for every $1,000 of assessed value. 

That is in the average range in New Brunswick but well above what businesses in other provinces pay.

According to the Real Property Association of Canada the average commercial property tax rate in Canada is $23.94 per $1,000 of assessed value, 43 per cent less than what Storey faces.   

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The highest commercial tax rate the association tracks is in Montreal, which is still 11 per cent better than the rate in Doaktown.

It's even worse for commercial property owners in New Brunswick cities, especially in Saint John.   

Keith Brideau, a developer in the city, began buying up and renovating old downtown Saint John commercial buildings in 2003. 

Brideau is up to 15 properties now and said he likes pretty much everything about the restoration business, except the sting of the property tax bill it generates at the end of renovations

A jolt through the mail

"We're talking big numbers," he said.

"It's always a nervous time of year when you get the property tax bill in the mail and you're just looking for that huge increase," he said.

Beginning two years ago, Brideau's company Historica Developments bought and restored a boarded-up brick building on Canterbury Street, which now houses Picaroons brew pub and other retailers. 

This year he watched his property tax bill at the site more than quadruple, to $71,000.

Biggest chunk of budget

Property tax concessions: What you need to know

5 years ago

Duration 2:31

CBC New Brunswick's Robert Jones walks you through a CBC investigation that showed some $3.5 billion worth of property in New Brunswick enjoying some kind of special tax treatment and a tradition of concessions that cost the province an estimated $380 million, plus interest, over nearly four decades.He said it instantly became his single largest expense as landlord and he's concerned the same thing is about to happen again at a nearly complete development in the old Bustin's Furniture building on Germain Street.

"It's not until you invest in a few properties and you start to transform some of these buildings and invest millions of dollars that you fully realize the level of impact property tax can have on your development," Brideau said.

"It makes it very difficult to build a case for other developments."

Treated as deep well

Still, two years ago, in a hunt for more property tax revenue, the Gallant government looked past all of the deals granted to other landowners and increased taxes on commercial property owners instead.   

"We simply cannot afford to miss out on property tax revenue at this time," then-finance minister Roger Melanson said in a news release.

Commercial property owners find that discouraging.

"It's almost like you're renting your business from the government," said Storey in her Doaktown restaurant.

Questions value to economy

Brideau said he doubts that extremely high taxes for some property owners and extremely low taxes for others is the fairest way to divide the tax burden or even the best thing for the economy. 

And he would like to see the entire system reviewed in detail.

"When something has been around for a long time it tends to stay the same," he said.

"I think we have to challenge the existing system."