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Toronto to end commercial tax rebate, adopt rent control

Next week’s executive committee meeting is gearing up to discuss sweeping changes to housing in Toronto.

Mayor John Tory recently proposed phasing out the vacant commercial and industrial tax rebate program that gives businesses that are sitting empty a tax rebate. The tax rebate program, which has been in place since 2001 offers unoccupied commercial properties a 30 per cent tax rebate and industrial properties get 35 per cent. The program requires owners to try and rent the space, but does not provide a time limit on how long a business owner can receive the rebate. A city report revealed the program has given more than $367 million in subsidies to property owners, much-needed revenue that could be better spent elsewhere.

The proposal that will be discussed at next week’s meeting recommends the city lower the tax incentive to 15 per cent, beginning on July 1, 2017 to June 20, 2018, and then permanently shut down the rebate program on July 1, 2018. The report also recommended the rebate expenditures be reinvested in job growth programs and the poverty reduction strategy. This decision has been widely embraced by the city because poverty reduction is in dire need of funds in Toronto, and promoting businesses to stay empty is bad business after all. The rebate program has been criticized in the past because it allowed property owners to sit on their vacant stores while the value of the location increased. This has left several stores empty and little available business real estate in Toronto.

The executive committee also plans to focus on rental affordability in Toronto. Recently the province has put forward a bill on rental control, and has indicated that municipalities will be able to implement it at will. City council is moving forward with this initiative and will discuss how to implement rental control with a specific provision to have the rent control tied to the unit and not the tenant. There will also be an update on inclusionary zoning and laneway suites in Toronto.

The city is taking sweeping steps to respond to the high-pressure housing crisis in Toronto. By removing the tax rebate to empty businesses, it incentivizes business owners to fill their storefronts and reallocates much-needed funds to poverty reduction. Moving forward with rent control, inclusionary zoning and changing the regulations around laneway housing are all necessary to make Toronto a more liveable city. The outcome of the meeting will be interesting indeed, and will set up for a sure-to-be exciting May City Council.