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St. John's business owners distressed by tax-and-spend budget

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City forecasts spending increases of $15 million by 2020

St. John’s, December 11, 2018 – Many small business owners in the city of St. John’s are distressed by a City budget which will increase the commercial property mil rate by 1.4 in 2019 on top of increases in assessed property values. These tax increases come during a prolonged economic slowdown and at the same time that City of St. John’s spending will increase by 2.4 per cent. The value of the 2019 budget is more than that of the 2016 budget, which imposed significant tax increases on business owners at the time. In addition, the City forecasts spending will further increase by $8 million, or 2.6 per cent, in 2020.

Since the new assessed property values were released in mid-November, the Canadian Federation of Independent Business (CFIB) has heard from some members concern about increases that, for the most part, range from one to four per cent. However, there are instances in which business owners have been hit with increases as high as 70 per cent.

“Many small business owners in St. John’s were hoping the City would provide some relief to alleviate the cost they are being hit with on all sides,” said Vaughn Hammond, director of provincial affairs in Newfoundland and Labrador for CFIB. “These tax increases are very discouraging especially in light of the City continuing its free spending ways.”

With the City’s budget plan, the average business owner in St. John’s can expect to pay approximately $3,500, or 7.5 per cent, more than they did in 2018. With the huge tax increases in the 2016 budget still fresh in their memories, many commented recently that if the City increased their mil rate as proposed in September 2018, they were unsure how they would cover it. They will need to sell more goods or provide more services. But in the current economy, this is very difficult to achieve, so a number of business owners will be hard-pressed to absorb another increase.

“Many small business owners are already pessimistic about the future and this budget is unlikely to change that,” explained Hammond. “In September, CFIB proposed initiatives the City could undertake to reduce spending while ensuring core municipal services could be provided in an affordable manner. Sadly, the City was not interested in reforming how it operates and business owners are bearing the brunt of that decision.”

The City has kept the residential-commercial property tax ratio at 3.38. Unfortunately, this means commercial property owners are burdened more than residential property owners, though they receive fewer services. The City is also continuing with its Continuous Improvement Framework to find efficiencies in how services are delivered. This initiative holds some promise in reducing the red tape (eg. time and cost of permit approval) business owners often incur.

“The City is trying to find ways to improve service delivery and reduce red tape for business owners through continuous improvement,” added Hammond. “However, the tax and spending increases in the 2019 budget will overshadow any accomplishments in this regard.”

For media inquiries or interviews, please contact:
Vaughn Hammond, Director of Provincial Affairs, CFIB
709-753-7764
[email protected] 

About CFIB
The Canadian Federation of Independent Business (CFIB) is Canada’s largest association of small and medium-sized businesses with 110,000 members across every sector and region, including 2,000 in Newfoundland and Labrador. 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.