Legislation to Eliminate Business Occupancy Tax Introduced
SERVICE N.S./MUNICIPAL RELATIONS--Legislation to Eliminate Business Occupancy Tax Introduced
A bill to eliminate the business occupancy tax was introduced today, May 5, on behalf of Nova Scotia's 55 municipalities.
Service Nova Scotia and Municipal Relations Minister Barry Barnet said the tax is inefficient for municipalities and businesses and creates the perception of double property taxation in Nova Scotia.
"As we market Nova Scotia as a good place to do business, this is a perception we can do without," the minister said.
"This day has been a long time coming," said Mayor Charles Crosby, president of the Union of Nova Scotia Municipalities. "Out of this legislation will come a commercial property tax system that is simpler for municipalities and businesses. The 55 municipalities in Nova Scotia stand squarely behind this bill and we look forward to it becoming law."
Business occupancy tax is paid on the assessed value of a commercial property. Depending on the type of business, the tax is the commercial tax rate multiplied by either 25, 50 or 75 per cent of the individual business's commercial assessment.
In the 25 per cent category are businesses such as campgrounds, restaurants, automobile dealerships and hotels. About 11 per cent of businesses fall into this category.
The 75 per cent category includes businesses such as insurance companies, banks and other financial institutions. These businesses comprise about three per cent of Nova Scotia businesses.
All other Nova Scotia businesses -- about 85 per cent -- are in the 50 per cent category.
Among the many issues raised in the consultations that took place before this legislation was the impact of going to rate-times- assessment on seasonal, tourism-related businesses. Currently, these businesses pay the business occupancy tax only during the months they are open.
To offset this impact, seasonal businesses will be taxed by municipalities at 75 per cent of the commercial tax rate. This measure becomes effective April 1, 2006.
The business occupancy tax will also be eliminated immediately for other businesses in the 25 per cent category, such as year- round tourism accommodations, restaurants and automobile dealers.
Businesses in the 50 per cent category, which includes most Nova Scotia businesses, will see the business occupancy tax phased out over five years.
Banks and other businesses in the 75 per cent category will continue to pay business occupancy tax for seven years until it is eliminated in year eight.
The legislation introduced today also addresses a situation unique to owners of commercial rental space. Under the current system, the owner of the building pays property tax, but the commercial tenant pays the business occupancy tax. Under the new rate-times-assessment system, the owner of the property would see a significant increase in annual municipal taxes. While many commercial leases have tax increase clauses, others do not. For those that do not, the legislation allows building owners to recover this additional tax from their tenant, who is no longer paying the business occupancy tax.
Incorporated villages and rural fire districts also are in a unique situation. They currently charge a single rate for both residential and commercial properties, and this rate is also applied to the business occupancy assessment. In order for them to recover revenues that would be lost by eliminating the business occupancy tax, and to ensure residential properties are not impacted, villages and rural fire districts will be allowed to charge a commercial rate that is not to exceed 1.5 times the residential rate.
Charities and non-profits are currently exempt from paying the business occupancy tax. To offset the increased commercial tax, the Municipal Government Act allows municipalities to provide either tax relief or a grant to affected organizations.
If passed, the legislation calls for the phase-out of the business occupancy tax to begin April 1, 2006.
FOR BROADCAST USE:
A bill to eliminate the business occupancy tax was introduced today (May 5th) on behalf of Nova Scotia's 55 municipalities.
Businesses and municipalities have long called for the tax's elimination.
If passed, the legislation calls for the phase-out of the business occupancy tax to begin April 1st, 2006.