Thursday June 17th, 2010 - Over-Taxing Small Businesses Can Cause Firms to Close Doors And/Or Move

Running a business in British Columbia can mean paying high taxes if you happen to be in one of the provinces residentially rich municipalities. One such municipality is North Saanich, where business owners pay seven times the amount of tax that a residential owner does. Most of Saanich is residential, so the tax burden, expected to be eased somewhat by the Uptown shopping centre, is carried by a handful of businesses.

Other municipalities in the province that have lopsided tax ratios are Coquitlam and Vancouver, both of which present business owners with tax bills almost five times higher than residential. As an example, a property in Vancouver valued at $944,916 will garner a residential tax bill of $3,950. A business owner will see a bill of $18,378.

This amount of taxation can be devastating to a small business. Sometimes firms are forced to lay off workers, cut hours or forego donating money to local charities or organizations just so they can meet their tax bill. In worst case scenarios the businesses fold.

Some municipalities have realized that this is a potentially devastating trend and have taken measures to make their areas more attractive to business owners. Toronto, Canada’s largest city, has committed to bring their business to residential tax rates down to a 2.5 to 1 ratio by the year 2013. Saskatoon, Saskatchewan has done even better, cutting their ratio down to 1.75 to one. British Columbia just might see businesses head east if politicians don’t realize that their heavy tax burden is putting local firms in jeopardy.