Commercial Tax Policy

The municipality’s commercial tax base is one revenue stream used to pay for public services. There are approximately 5,700 commercial properties in the region, with vastly different characteristics – including a wide range of square footage, finishes and assessed values. The effect these differences have on the properties’ tax rates was brought into Regional Council’s attention from key stakeholders, specifically local business improvement districts (BIDS) and their members.  

In April 2015, Regional Council directed staff to conduct an analysis   of the impacts of commercial tax on small business across the region. In late 2015, staff presented Regional Council with the Commercial Tax Options for Small Business   staff report. 

Through surveys, feedback from Regional Council, and consultations with other public finance experts and the public – staff determined predictability   was the most referenced issue for businesses. As such, Regional Council submitted a request to the Province of Nova Scotia’s Ministry of Municipal Affairs for amendments to address these concerns. The Province’s Bill 177, Municipal Government Act (amended) and Halifax Regional Municipality Charter (amended), gave municipalities the ability to phase in assessments over a 10-year period. Municipal finance and legal staff then drafted an Assessment Averaging By-Law,  which was ratified by Regional Council in 2022.

Further, the Province’s Bill 52, Halifax Regional Municipality Charter (amended), provided flexibility in how and where the municipality can set its commercial tax rate structure. Staff analyzed a variety of options including, but not limited to: taxing properties by frontage (cost-based); square footage (tax per square foot of building); and geographical options (tied to Centre Plan, BID areas or other areas)

Municipal finance staff then commissioned Canmac Economics , an econometric   consultancy, to determine optimal changes to the commercial tax structure given current and prospective legislative powers. The analysis focused on how the commercial tax burden contributes to firm level investment decisions, also known as the marginal effective tax rate (METR) – the tax wedge between the before and after-tax rate of return on capital. 

The conclusions of the report   were as follows: 

1. Property tax cannot achieve equity objectives.
2. If commercial property tax burden fell by 50 per cent, impact on new building investment would be negligible. (i.e., less than 2 per cent)
3. Incentive use should be limited.
4. The optimal solution is marginal cost pricing of municipal services (price signals for those that use services)

In January 2018, municipal staff hosted a Commercial Tax Symposium   to engage the business. This was the first meeting of business and municipal finance staff on this topic. Staff provided an overview of the issue and potential options – and then the business community provided feedback. Canmac Economics presented their findings to the group and fielded questions from attendees. 

After the initial symposium, finance staff drafted a variety of potential options.

• Small Business and Commercial Tax Options- Staff Report, Feb. 15, 2022
• Tiered Commercial Taxation Areas Administrative Order- Staff Report, June 14, 2022

• Municipal Commercial Tax Assessment – Halifax Partnership
• Bill 177 – Province of Nova Scotia 
• Bill 52 – Province of Nova Scotia
• Commercial Tax Options for Small Business – Staff presentation to Regional Council’s Committee of the Whole (Nov. 10, 2015)
• City Benchmarking: Annual Property Taxes of Class A and B Office Buildings and Industrial Space – Altus Group Ltd (Sept. 2015)
• Commercial Tax Intensity Map for Regional Centre (2014)
• Hiding in Plain Sight: The Harmful Impact of Provincial Business Property Taxes – Commentary by the C.D. Howe Institute
• Study of Commercial Taxes as a Driver for Business Location Decisions – Altus Group Ltd (July 2012)
• Academic Paper: Property Tax Incentives for Business – Lincoln Institute of Land Policy (2012)