Legislative Amendments Enable City of St. John’s to Streamline Commercial Taxation

Amendments to the City of St. John’s Act and the City of St. John’s Municipal Taxation Act, introduced in the House of Assembly today, will enable the City of St. John’s to create efficiencies in the administration of commercial taxation by blending business tax with commercial property tax in the city.

“We are pleased to work with the City of St. John’s on its request to have these amendments made to enable the city to provide a commercial tax system which is equitable and transparent,” said the Honourable Kevin O’Brien, Minister of Municipal Affairs. “Our government has undertaken significant efforts in recent years to assist municipalities in carrying out their responsibilities and providing services to residents. We will continue to work with municipalities to ensure they have the ability to effectively collect taxes which are used to provide important services to residents.”

The City of St. John’s currently has two forms of commercial taxation in the city – business occupancy tax and commercial property tax. Business tax is based upon the assessed value of the property occupied by a business multiplied by the applicable tax rate, which varies for different types and classes of business. Commercial property tax is based upon the assessed value of the property multiplied by the commercial mil rate, which is common to all commercial properties.

The amendments to the City of St. John’s Act and the City of St. John’s Municipal Taxation Act will allow the city to streamline the processes for businesses, commercial property owners and the city. The blending of business tax with commercial property tax will require the city to increase its commercial property tax to recover previous revenue generated by business tax. The new tax structure will be revenue neutral by not increasing overall taxation and will provide a clear taxation structure. In the circumstance where a commercial property owner is leasing property to a business, other than property in which the Provincial Government is a tenant, the lessee can collect increased fees from the business in order to offset any tax increase.

“As we move forward with a three-year tax cycle beginning in the 2013 fiscal year it is important that we streamline our taxation collection from businesses and commercial properties,” said St. John’s Mayor Dennis O’Keefe. “We are one of the last major centres in Canada to have a business occupancy tax and we are committed to ensuring that the elimination of this tax is implemented on a revenue neutral basis. We are very pleased the Provincial Government is working with us to develop this new taxation model which will meet both our needs and the needs of the business community. We look forward to continuing to work with local businesses in the upcoming months to ensure a smooth implementation of this change.”

The city submitted its request for legislative amendments to the Provincial Government following consultation with stakeholders and the engagement of a consultant.

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2012 06 14                           3:05 p.m.