Regina, April 3, 2019 – Whitehorse (YT), Winkler (MB) and Victoriaville (QC) were named the top three communities in Canada for entrepreneurship in 2018 by the Canadian Federation of Independent Business (CFIB)’s latest Entrepreneurial Communities report. Rounding out the top five were two more Quebec communities – Rimouski and Rivière-du-Loup. Among the major cities, both Saskatoon and Regina made the top ten list, ranking 7th & 8th place respectively.
“Small businesses are the backbone of the Canadian economy, bringing jobs, new products and a sense of identity to their communities,” said CFIB vice-president and chief economist Ted Mallett. “We want to celebrate that and congratulate the cities that have landed on the top of our list this year by embracing entrepreneurial values and understanding the needs of small business owners.”
Now in its 10th edition, the CFIB Entrepreneurial Communities Report evaluated Canada’s 125 most populous communities against 13 key indicators that identified the current state of entrepreneurship in each community. The 13 entrepreneurship indicators are grouped into three main categories: Presence, Perspective and Policy.
“We are pleased both Saskatoon and Regina are in the top ten overall rankings for major cities,” said Marilyn Braun-Pollon, CFIB’s Vice-President, Prairie & Agri-business. Although not represented highly in the Presence or Perspective categories, Prairie cities ranked considerably better in the policy area, collecting six of the top-10 spots among large centres. “With relatively low municipal property tax gaps between commercial and residential property owners, it is no surprise that both Saskatoon and Regina also ranked in the top three in the Entrepreneurial policy category.”
“However, we fear annual municipal property tax hikes may jeopardize these rankings in the future,” added Braun-Pollon. “For those cities wanting to make the top ten list, they need to work harder on improving their business climate, which includes narrowing the property tax gap between commercial and residential property owners.”
2018 Top 10 overall scores, major cities (population > 150,000)
- Kelowna (B.C.) 63.5
- Sherbrooke (Que.) 61.9
- Trois-Rivières (Que.) 61.2
- Montreal periphery (Que.) 60.9
- Gatineau (Que.) 59.5
- Toronto periphery (Ont.) 59.0
- Saskatoon (Sask.) 58.6
- Regina (Sask.) 58.1
- Kitchener-Cambridge-Waterloo (Ont.) 57.6
- Edmonton periphery (Alta.) 57.0
Property taxes are a major pain point for small firms
One of the factors used to determine the rankings was the ratio between commercial and residential property taxes in each municipality. Nearly all local governments tax commercial properties at much higher rates than residential properties, placing a major constraint on local businesses. Commercial property rates can be up to 4.5 times higher than residential rates in some jurisdictions.
However, favourable provincial legislation introduced in 2017 in Saskatchewan helped narrow the distortions between residential and commercial property taxation in cities there. During the 2017 property revaluation, the government increased the percentage of value on residential properties to 80 per cent, compared to the 2013 rate of 70 per cent, while keeping commercial properties at 100 per cent which narrowed the provincial portion of the property tax gap.
“What the top communities have in common is strong policy that supports small business owners and fosters entrepreneurship, namely close ratios between residential and commercial property taxes,” added Mallett. “Businesses don’t use municipal services as heavily as residents, so ideally, we would see a more equal distribution of the property tax burden between them. Instituting more business-friendly commercial property tax rates is something that every community can do to make it easier on its citizens to start and run a small business.”
The report also took into account provincial property tax ratios. Provincial property taxes are usually applied towards the education system. Some jurisdictions, like Quebec, have perfect one-to-one balances between commercial and residential taxes, but the ratio for commercial properties balloons up to a 7.9 ratio in many cities in Ontario.
Due to changes in the way the rankings are calculated this year, the results may not be comparable to previous Entrepreneurial Communities reports.
To arrange an interview with Marilyn Braun-Pollon, CFIB’s Vice-President, Prairie & Agri-business, please call (306) 757-0000, 888 234-2232 or email [email protected]. You may follow CFIB Saskatchewan on Twitter @cfibsk.
The Canadian Federation of Independent Business (CFIB) is Canada’s largest association of small and medium-sized businesses with 110,000 members (5,250 in Saskatchewan) across every industry and region. CFIB is dedicated to increasing business owners’ chances of success by driving policy change at all levels of government, providing expert advice and tools, and negotiating exclusive savings. Learn more at cfib.ca.