St. John's property taxes poised to rise in 2016 city budget

Ahead of expected tax increases in this year's St. John's city budget, a councillor and alocal business owner are among those speaking out about the proposed changes.

While it's unclear exactly how much rates will go up, it has beenestimated that property assessments will be up over 15 per cent on average.

But even though the city is expected to bring itsmill rate down, Coun.Sandy Hickman said this will not be enough to offset an overalltax increase.

The mill rate is the amount of tax payable per dollar on the assessed rate of a property.

Hickman said recent challenges have left council little to no choice onwhether to increase taxes.

"It's been a difficult year in terms of the expansion of the tax base of the city," he said.

Hickman told CBC News that the number of new homes in the city this year has fallen behind the growth that they've seen in previous years. The growth had been more than five per cent in the past few years, but this year it was only 1.5 per cent.

"We have no other way of gaining taxes," said Hickman.

"So when we found that the tax base didn't expand this year as it has in other years that, unfortunately, with the usual increased costs of four or fiveper cent, we have to look to our taxpayers for perhaps some extra dollars."

Business owner upset

Although the rising property assessments will increase the amount of tax paid out by homeowners, a local business owner who leases his store said the changes will hit business owners hard as well.

Bob Hong, managing director of Timemasters Inc, a comic book shop on Kenmount Road, said his landlord's property assessment increased from $600,000 in the 2011 assessment to $850,000 in 2016.

Because his business occupies 52 per cent of his landlord's building, he said that he has to foot 52 per cent of the bill through the city's blended business tax.

Alot of people have simply decided to close, rather than face another round of trying to struggle with this - Bob Hong

That means Hong will see a tax increase of $3,406 from the previous year, a figure that he said is tough to swallow in what he calls an increasingly poor market.

"We've been hammered with the falling Canadian dollar, and everything that we bring in is mostly U.S. imports. We're hammered on the one side, and then we're hammered on the other side with rising assessment rates and increased expenditures," Hongsaid.

"I find it hard to scrounge another $5,000, when the foreseeable future, with everything going the way it is with Saudi oil, says that we're going tobe in trouble for the next five years anyway."

He said that rising property assessments are making it much harder for small businesses to survive in the city, especially in a climate where they're not only facing challenges from big box retailers, but the online market as well.

Blended business tax to blame

Part of the reason for the tax increases, Hongsaid, is because of the City of St. John's blended business tax, which came into effect on Jan. 1, 2013.

Hong said that although the tax was implemented with the goal of simplifying how the city collects taxes, in effect, it has increased the amount of taxes that small business owners pay.

He said to offset the tax changes that occurred when the Business Realty and Business Occupancy taxes were combined, the city raised the mill rate. But with higher property assessment values, a higher mill rate means that taxes have gone up substantially.

They're, in my view, unnecessary and excessive, so I won't be supporting what's going to go forward. -Coun. Art Puddister

Wong would like to see the city make moves to lower the mill rate to bring it in line with a level that business owners were comfortable with, before the increased assessments of the past three years.

But until that happens, he said that it will continue to be difficult to run his business with the proposed tax increases.

"It's reasonable for the city to request a sufficient level of taxation from small and medium-sized businesses in the city, for the privilege of operating a business but they should not knowingly, or unknowingly milk those businesses dry," said Hong.

"Alot of people have simply decided to close, rather than face another round of trying to struggle with this."

Commercial and residential mill rates to be revealed Monday

The current residential mill rate is 8.1, while the commercial mill rate is 26.2.

Earlier this week, Coun.Art Puddister spoke out about the changes, and alluded to his displeasure with the decided-upon mill rates for 2016.

• Tax hikes too high, says Art Puddister, breaking ranks with St. John's city council

"The mill rates have been agreed to on Nov.23. They're, in my view, unnecessary and excessive, so I won't be supporting what's going to go forward," he said.

The city will reveal both the commercial and residential mill rates when it makes thefull budget for 2016 available to the public on Dec. 14.