TORONTO, Sept. 26, 2014 /CNW/ - For the eleventh consecutive year, the Real Property Association of Canada (REALpac) has released a Canada-wide survey of property tax rates of major urban centres.
Toronto, Vancouver, and Montreal continue to post the highest commercial to residential tax ratios, which are all in excess of 4:1, while the average commercial to residential tax ratio for all municipalities was 2.79. Toronto's ratio continues its downward trend for the eleventh consecutive year, demonstrating its commitment to reducing commercial property tax rates in order to improve the business climate and increase competitiveness over the long term. By 2020, the city aims to reduce the tax ratios for commercial class properties to 2.5-times the residential rate. In contrast, Montreal's ratio increased for the tenth year in a row, despite seeing a decrease in both commercial and residential rates between 2013 and 2014. This is a result of Montreal's residential tax rates decreasing at a faster pace than commercial rates. Vancouver remains relatively stable with a ratio approximating 4.33 over each year since 2011.
Besides Toronto, Vancouver, and Montreal, Halifax was the only other municipality above the survey average with a ratio of 2.81. Nonetheless, Halifax's ratio has been edging downward since 2012 and it saw the largest decrease between 2013 and 2014 of all cities surveyed at 4.42%. This decrease is attributed to the fact that Halifax's commercial rates went down by a greater amount than the city's residential rates. A 6.8% increase in Halifax's taxable commercial assessment base allowed for the drop in commercial tax rates.
On the other end of the spectrum, Saskatoon and Regina had the lowest commercial to residential tax ratios. It is worth noting, however, that the two cities also had the highest residential property tax rates in the survey, accounting for the perceived low ratios. Saskatoon has made it an initiative to maintain their target ratio of 1.40.
Winnipeg and Calgary experienced increases to their commercial to residential ratios of 1.9% and 2.25% respectively, while Ottawa saw a slight increase of 0.4%. Ottawa's ratio is expected to remain stable around 2.70 for the rest of Ontario's 2013-2016 property assessment cycle.
The highest estimated commercial taxes per $1,000 of assessment are maintained by Ottawa, Halifax, and Montreal, although all three cities experienced a decrease in commercial rates of between 3% and 5%. On the other end of the spectrum, Calgary, Vancouver, and Saskatoon possessed the lowest commercial rates. All municipalities decreased their commercial rates in 2014 except for Regina and Saskatoon, which saw taxes increase by 3.3% and 2.9% respectively.
Regina and Saskatoon also experienced increases from a residential tax per $1,000 of assessment standpoint. The average Saskatoon residential property tax bill rose 3.96%, largely a result of revenue being dedicated to roadway maintenance and also an increase to the city's library budget. Edmonton was the only other city to see an increase in residential rates with a rise of 2.5%. Large tax bases and the highest assessed property values allowed Toronto to decrease residential tax rates for the sixth consecutive year. Similarly, Vancouver saw a decrease for the tenth year in row.
"Tax fairness nationwide is a core pillar of REALpac's policy agenda. Excessive property taxes on commercial and industrial properties will make Canadian cities less competitive, and ultimately reduce the property assessment base and jobs. We will continue to encourage municipalities to balance commercial and industrial property taxes with residential property taxes as a way of enhancing local and sustainable economic growth", says Michael Brooks, REALpac's CEO.
Prepared in combination with Altus Group, the 2014 survey results indicate what appear to be progressive results as average tax rates, both commercial and residential, have been declining. However, the fact that tax rates have been declining does not denote a significant overall improvement for tax payers, as assessment values have been on the rise. Most Canadian cites have extended the ongoing trend of decreasing commercial tax rates to promote business growth. Residential tax rates have continued to decline over the past eleven years at a faster rate than commercial tax rates. REALpac remains committed to working with municipalities across Canada on achieving tax fairness.
REALpac is Canada's most senior, influential and informative voice in the real property investment industry. REALpac brings together the industry's Chief Executives to collectively influence public policy, to educate government and the public, to ensure stable and beneficial real estate property and capital markets and to promote the performance of the real property sector in Canada. Member companies include publicly traded real estate companies, real estate investment trusts (REITs), private companies, pension funds, banks and life insurance companies with investment real estate assets each in excess of $100 million, large owner/occupiers and pension fund advisers as well as individually selected investment dealers and real estate brokerages. The commercial real estate sector makes a substantial contribution to the Canadian economy, generating $63.3 billion in economic activity in 2011. Visit us at realpac.ca or contact Carolyn Lane, VP, Communications, [email protected].
About Altus Group Limited
Altus Group is a leading provider of independent commercial real estate consulting and advisory services, software and data solutions. We operate five Business Units, bringing together years of experience and a broad range of expertise into one comprehensive platform: Research, Valuation and Advisory; ARGUS Software; Property Tax Consulting; Cost Consulting and Project Management; and Geomatics. Our suite of services and software enables clients to analyze, gain insight and recognize value on their real estate investments. Altus Group has approximately 2,200 employees in multiple offices around the world, including Canada, the United States, the United Kingdom, Australia and Asia Pacific. Altus Group's clients include financial institutions, private and public investment funds, insurance companies, accounting firms, public real estate organizations, real estate investment trusts, healthcare institutions, industrial companies, foreign and domestic private investors, real estate developers, governmental institutions and firms in the oil and gas sector. Visit us at altusgroup.ca or contact Sayla Nordin,VP of Communications, [email protected].
SOURCE: Real Property Association of Canada
For further information: Carolyn Lane, VP, Communications, REALpac, [email protected]