By Daniel Huot
Ottawa’s businesses and municipal authorities are worried a new provincial legislation could remove millions of dollars from the region’s economy.
The proposed Fairness for Property Taxpayers Act could remove some of the federal payments in lieu of taxes (PILs) from the municipality’s coffers because of a new provision limiting property tax increases at 10 per cent for 1998 and at five per cent for 1999 and 2000.
Because of the new provincial property assessments put in place earlier this year, the city was expecting to collect over $9 million dollars in PILs, up from $5.7 million last year.
However, because of the new property tax limits, the city could receive only $6.6 million in PILs and the regional government will lose some of its expected revenue from PILs as well.
Ottawa Mayor Jim Watson said the situation is catastrophic for the 1998 budget.
“We will have to find $14 million this year with only two months to go,” he explained.
Watson emphasized the importance financial relationship that the city of Ottawa shares with the federal government.
“We get a third of our budget from the federal government,” he said. “Anything that hinders payments in lieu of taxes hurts businesses and small property tax payers.”
Gerry LePage, executive director of the Bank Street Promenade, said any loss in federal revenue would hurt business.
“If we forfeit PILs, it’s going to have a domino effect,” he explained. “All sectors will be affected — municipal, retail, commercial.
“The problem is where the money will shift to. If the population has less income, it will certainly affect the retail sector,” he said.
Coun. Elisabeth Arnold also criticized the proposed legislation.
“We only have two months left. It’s incomprehensible that the provincial government didn’t take this into account,” she said.
Businesses also face the possibility of paying property taxes within the next two months, according to Arnold.
“We will have to re-issue tax bills in 1998 or 1999 to draw back the $14 million differential,” she said.
“People who thought they had paid their final tax bill in September will be given a supplementary bill.
“Businesses that planned their budgets on information we gave them being accurate will have to come up with money accordingly,” she explained.
When asked about the possibility of job losses, Arnold also said the loss of $14 million probably means lay-offs at the municipal level.
“We don’t even know where to make cuts,” she said. “But we’re talking about over 100 jobs.”
Both municipal and business representatives questioned the property tax caps proposed in the legislation.
“The business tax in itself is not a solution. The solution is a fair assessment of property value,” said Arnold, referring to the provincial changes in property value assessment made earlier this year.
LePage also questioned methods that could be used if any property tax hike came into effect.
“You have to examine what method would be used to calculate the 10 per cent cap, such as ratios,” he said. “We are viewing the situation cautiously.”
Adill Hissan, owner of Epochs, at 244 Bank St., says any increase in taxes is out of the question when it comes to merchants on his street.
“If you raise taxes on landlords, they will have to hike leases,” he said. “The principle is that when you have a weak economy, an increase in taxes will only hurt people because they have no money in their pockets.”