A group of small business owners in Birch Cliff say city taxes are leading to less business and more bed sheets in shop windows on Kingston Road.
Organizer Paul Ryan said he has seen several local shops and wholesalers fold and then sell to new landlords who rezone the properties as residences to get a lower tax bill.
“They zone it residential, get rid of the commercial component, throw up a bed sheet and, Bob’s your uncle – they immediately bring the tax down thousands of dollars,” said Ryan.
Ryan owns Sun Ray Media, an advertising consultancy with a small office at Kingston and Kalmar. Last year, he said, the city’s 2.84 per cent tax on his commercial property was Sun Ray’s largest single expense.
“When you can’t fix your own roof because you’re shelling out for taxes, that’s wrong,” he said.
Two summers ago, Ryan canvassed other Kingston Road businesses from Hunt Club Drive to Midland Avenue to see if they too were feeling pinched by the commercial property tax, which is nearly four times what homeowners pay. He also started a website.
In a few days’ canvassing, 65 business owners had signed a petition calling for a lower tax category for small businesses in struggling areas.
After receiving the petition, local Ward 36 councillor Gary Crawford convened a meeting between the owners and directors of the city’s economic development and budget departments.
Across Toronto, Crawford said city council is trying to rebalance commercial and residential taxes.
“If we raise residential taxes in the city by a certain percentage, business taxes go up half or three-quarters of that,” said Crawford, who sat on the city budget committee last term.
But at the local level, Crawford said it’s unlikely the city can set a separate tax rate for depressed commercial areas.
“That’s a struggle for the city,” he said, adding that staff don’t have street-by-street level data to make such a change.
The move is also complicated by the fact that Queen’s Park, not city hall, has final authority for tax rates.
But Crawford said city staff are looking at creating a separate tax bracket for small retailers. Besides tax changes, Crawford said the city can play a key role in encouraging new developments like the four new condos planned for Birch Cliff, some of which will have ground-floor retail.
“If you want to increase the business, number one you’ve got to get residents to go to the stores,” he said, adding that Birch Cliff could also use a new mix of businesses.
“The five and six-storey developments coming to Kingston Road will definitely help out a lot.”
Hairdresser Christina Robson, who owns the salon Organic By Nature, is another local business owner who would welcome more foot traffic and lower taxes.
In 2012, she bought a Kingston Road store which, like many buildings in the area, has apartments upstairs and downstairs. Although only part of her building is designated a commercial property, that was enough to triple her tax bill from $2,000 to $6,000 a year.
“We’re paying these high taxes because we’re supposed to be getting all these walk-ins,” said Robson. “But I’m having to spend money sending out flyers and advertising on the internet to get people to my door.”
Paul Ryan agrees.
“We’re not the Beaches, where they do have walk-ins,” said Ryan, adding that even when the new condos go up, Kingston Road will get a lot more pass-through car traffic than Queen Street.
“We have a highway in the middle, and yet we’re paying the same rate.”
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