Province, Municipalities Preparing to Eliminate Business Occupancy Tax

SERVICE N.S./MUNICIPAL RELATIONS--Province, Municipalities Preparing to Eliminate Business Occupancy Tax

The Nova Scotia government will introduce legislation this spring on behalf of the Union of Nova Scotia Municipalities to eliminate the business occupancy assessment tax.

The business occupancy assessment tax is levied on businesses by municipalities, in addition to the commercial property tax. It is paid entirely to municipalities, the provincial government does not receive any of the revenue. Municipalities and businesses have long called for its removal, but there was never agreement on how to eliminate it.

"The tax is perceived by many to be double taxation," said Barry Barnet, Minister of Service Nova Scotia and Municipal Relations. "As we market Nova Scotia as a good place to do business, this is a perception we can do without."

The president of the UNSM said municipalities are looking forward to the legislation. "Elimination of the business occupancy assessment tax will create a simpler and fairer tax structure, whereby the vast majority of businesses across the province will end up paying less in commercial property taxes," said Mayor Charles Crosby. "I look forward to working with the province in support of legislation that will finally eliminate this antiquated tax."

Public consultations were held in the summer of 2004 based on a joint provincial-UNSM proposal to do away with the tax. A number of concerns were raised that were not addressed by the proposal, including the impact on businesses in the 25 per cent assessment category which includes restaurants, seasonal and tourism-related businesses. Concerns were also expressed by incorporated villages which, unlike other municipalities, do not have authority to charge separate tax rates for residential and commercial property owners.

"I am very confident the bill we will introduce will address the issues that have been raised," Mr. Barnet said. "The municipalities and the province have been engaged in a very delicate balancing act, but I believe our persistence and ongoing consultations will result in a bill that everyone can live with."

An economic impact study prepared by Canmac Economics concluded that eliminating the tax would make for a more efficient tax system, and its economic impact would be marginal. The report identified other issues that were well known last summer and fall, and those issues will be addressed in this spring's legislation.

Mr. Barnet said provincial and municipal officials have been consulting with the business community throughout the fall and winter, exchanging ideas and scenarios in an effort to introduce legislation this spring.

"The bill is still being finalized, but the province and municipalities are confident that we can introduce a bill that will address the issues raised last summer and in the Canmac report," Mr. Barnet said.

The Canmac Economics report is available on the Service Nova Scotia and Municipal Relations website at servicens.ca/boat/ .