By Jacqueline Cuffley
Businesses on Sparks Street say their property taxes are disproportionately high and many have filed appeals of their 2003 tax assessments.
“The city is shoving the tax burden onto the retailer,” says Margaret Lewis, co-owner of O’Shea’s Market Ireland.
Some say they spend approximately 50 per cent of their revenue on taxes.
“For some businesses it’s life or death, they have to be reduced,” says Lewis.
Tax assessments done by the Municipal Property Assessment Corp. are based on how much revenue a property generates and how much it could be sold for.
Holly Layte, co-owner of the Marvellous Mustard Shop, says that as a tenant in a government building, her tax assessment is partially based on revenue she should be making from government building workers, but says she doesn’t benefit from their foot traffic at all.
“We have separate entrances and exits, we don’t share any common areas,” explains Layte.
Other business owners on Sparks Street also say their assessments are clearly unfair because their location does not generate more business than other retailers in the area and therefore would not sell for more.
Lewis says that because her business is in a government building, she is a Crown tenant . This means she has to pay a large proportion of taxes at an office tax rate which is higher than the commercial rate.
Seventy-eight per cent of her business was taxed at an office rate although she has only a small office in the back of her store.
She and her husband calculated in June 2000 that they would have saved $3,291 in taxes if their shop were in the Rideau Centre instead.
“We are charged more per square foot than the Rideau Centre and other retailers,” says Ian Kimmerley, owner of Ian Kimmerley Stamps.
He says the average sales per square foot in the Rideau Centre is two times higher than most Sparks Street retailers,’ which equates to about four times the profit.
Sparks Street already has several empty storefronts, and because taxes are so high, Lewis says she’s worried new retailers will not move in.
Owners and merchants attended a meeting held by the Sparks Street Mall board of directors last week to discuss their taxes and the possibility of launching a group appeal.
The board invited Lorne Hess, vice-president at Derbyshire Viceroy Tax Consultants, to attend the meeting and inform retailers.
“There are some people paying more taxes than rent,” says Hess.
“Certainly, I think it needs to be looked at, there appears to be a problem.”
In the end, Layte says the owners decided against going forward with a group appeal. She says it was too difficult to get a group appeal together by the March 31 deadline, and many owners were discouraged by rejected appeals in the past.
This year, the city is appealing the tax assessments of almost 600 businesses, compared to the annual average of 100-150.
Many business owners did go ahead and file appeals independently, but Kimmerley decided not to.
He explains that he thinks appeals only make sense for large companies who can afford to pay for lawyers to represent them, so filing an appeal on his own is a waste of $125.
He says all he will do is file for reconsideration, which costs nothing, and hope he receives a hearing on his case.