“The Sault Ste. Marie Chamber of Commerce is concerned with the portrayal of information in the preliminary budget report presented to city council Monday” said Monica Dale, President of the Sault Ste. Marie Chamber of Commerce Board of Directors.
“As one of the largest stakeholder groups in the community, we have a role in the development, implementation and support of a fiscally responsible budget and taxation strategy which will benefit all taxpayers, now and in the future” adds Dale.
The Sault Ste. Marie Chamber of Commerce communicated their concerns regarding the 2015 municipal budget in a position paper that was submitted to The City of Sault Ste. Marie and the City of Sault Ste. Marie Finance Committee on March 13th of last year. This was the second such position paper produced by the Chamber.
The SSM Chamber’s Advocacy Task force has since been engaged in extensive research focusing on the Commercial and Industrial tax rates of Sault Ste. Marie in comparison to other cities across the province and the findings are extremely concerning.
The Chamber believes that the City must develop a strategy now to make changes to the taxation rates in order to attract and retain businesses in Sault Ste. Marie.
City staff are advising council that a comparison of taxation rates between cities is not an accurate measure of tax competitiveness. Staff, in the past, has compared tax levels based on taxes paid by the average homeowner and this year, staff are making comparisons based on average income. These comparisons are possible, in a mathematical sense, but mean very little in terms of our competitiveness as a taxing jurisdiction.
“The most accurate way to compare taxes between cities is tax paid per $100,000 of assessment. Apples to apples,” said Dale.
The more troubling aspect of the comparison methods proposed by city staff is that it ignores property taxes paid by businesses. The Chamber has found that our city is among the very worst cities in the province when it comes to high taxation levels for business property, especially industrial properties. In the north, Sault Ste. Marie taxes industrial properties 315% more than the city with the lowest rates for large industrial properties and 51% more than the city with the next lowest rate for Industrial Properties.
“Our research reveals that for large industrial properties in the Sault, the rate difference from 2008 to 2015 constitutes a 41% increase”, says Dale.
Dale went on to explain “In pure dollar terms, a large industrial facility assessed at $15,000,000 in Sault Ste. Marie, pays $1,296,300 in total property taxes. If that factory were to relocate to Sudbury, the owners would pay $814,215 in taxes and in North Bay they would pay $271,440. Based on this hypothetical example, differentials in the large industrial rates between Sault Ste. Marie and other communities are quite significant. Expressed in another way, if an employer had $15,000,000 to invest in a new factory in Northern Ontario, they would have to earn additional profit of more than $1,000,000 just to break even if they chose to build their facility in Sault Ste. Marie instead of North Bay.”
Recently our city has celebrated the positive impact property tax reductions have had on multi-family residential construction. If we are serious about economic growth and diversification, our community must take steps to make us more tax competitive across all rate categories.