Business groups laud Montreal limiting non-residential property tax rise

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Local business groups are praising the City of Montreal’s decision to limit non-residential property tax increases to an average of 1.9 per cent next year, but say they have concerns about rising spending.

The average citywide increase, which includes borough taxes, is the smallest since 2022 and is lower than the 2.2 per cent average increase on residential properties — continuing a practice in place since 2016 aimed at reducing the large gap between the higher tax rates charged on non-residential properties and the lower rates paid on residential properties.

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“In this budget and over the past few years, we have always worked to support the merchants that keep the local economy, in which we strongly believe, going,” Mayor Valérie Plante told reporters. “And we have significantly reduced the gap between residential and non-residential taxes.”

The size of the increase, however, will differ widely from borough to borough. Businesses in the downtown Ville-Marie borough will see taxes decline an average of 3.1 per cent, while businesses in Lachine will pay an average of 9.6 per cent more next year, making that the highest average increase in the city.

City officials say the difference comes down to the fact that the value of commercial buildings downtown is rising at a slower pace than the value of commercial and industrial buildings in other parts of the city.

Michel Leblanc, the president and CEO of the Chamber of Commerce of Metropolitan Montreal, said he’s pleased with the property-tax increase.

“If we just look at property taxes, I think it’s a budget that respects what we asked for. The city is limiting the increase to the inflation rate, and that’s very good, but the increase that’s concerning is the increase in spending. The city is increase spending by four per cent,” he said.

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Leblanc said he worries about the position that spending increase will put the city in and that while it can look to other levels of government for additional funding, those transfers tend to be for a limited amount of time.

Earlier in the day, Plante defended the spending increase, saying it was mostly linked to a $100-million increase in funding for the housing department — something she said she believes is a priority for most Montrealers at a time when the city is experiencing a housing crisis.

Opposition finance critic Alan DeSousa, who is also the mayor of the Saint-Laurent borough, said the tax increase on non-residential properties in his borough — which is the second-highest in the city at 7.7 per cent — and other boroughs that have a significant number of industrial businesses, like Lachine, will stall investments.

“We see that in the downtown area, for example,” he said. “The impact is being felt on valuations, the valuations have gone down and you can actually see tax decrease in the downtown area.”

The budget includes an additional $10 million for downtown Montreal and $4 million for cleanliness downtown and on major arteries.

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Plante said that spending is intended to improve the “customer experience” in downtown Montreal.

“The public expects an improvement in cleanliness, in their feeling of safety and better co-ordination of construction sites and they’re right. A lot of work has been done, but we’re not giving up, we will continue to dedicate effort and energy, particularly for that customer experience,” she said.

Leblanc, who has denied rumours that he plans to run for mayor next fall, said he’s pleased to see the city investing in making downtown more attractive and in public safety, but that the city has to improve the fluidity of traffic in order to get workers coming back to downtown office buildings.

While tourists and students have returned to downtown, he said many workers still don’t want to come down because it’s too difficult to access by car, or because they feel unsafe on public transit.

Downtown traffic is also encouraging people who live in the suburbs to patronize events outside of downtown Montreal, he added.

But Plante maintained that the city is doing better at co-ordinating construction sites and that it would be irresponsible for the city not to maintain infrastructure. Nobody wants a major water-main break like the one that occurred in August near the Jacques-Cartier Bridge, she said.

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“We’re going to continue to do better, but we will not throw away our responsibilities like other administrations have done in the past,” she said.

François Vincent, the Quebec vice-president of the Canadian Federation of Independent Business, praised the city for raising non-residential property taxes less than residential property taxes, because the gap between the two is the worst in the country.

An analysis of 2024 tax rates in 11 major Canadian cities by real estate advisory company Altus Group found that tax rates on non-residential properties in Montreal were an average of 4.46 times higher than residential properties, higher than in any of the other cities.

Of the cities analyzed in that report, released this week, only Vancouver and Calgary had lower residential property taxes than Montreal, though Montreal had higher taxes on non-residential properties than any of the 11 cities except Quebec City, Halifax and, for some types of property, Ottawa.

But Vincent questioned the larger-than-average increases in certain boroughs and wondered whether those increases could have been avoided if the municipal government was more efficient.

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The tax increases will directly impact small businesses, Vincent said, because commercial leases generally require the tenant to pay municipal property taxes on the space they rent.

That will put pressure on businesses to increase prices, he said, though smaller businesses are less able to raise prices, to avoid losing market share to larger competitors and online giants and will instead forego investments in their businesses, not give workers raises or reduce benefits.

“It’s not good for citizens, it’s not good for business,” he said.

While the non-residential property tax increase is lower than the 4.6 per cent increase in 2024 and the 2.9 per cent increase in 2023, it is the fourth-highest increase since 2016, before which non-residential taxes generally rose faster than residential property taxes.

The budget will maintain a lower tax rate on the first $900,000 of assessed value of non-residential properties, Plante said, a discount worth up to 16 per cent of the total property tax on a building.

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