Ontario Reduces Business Education Tax Rate in London by 30%Published on November 06, 2020
LONDON-- Yesterday, Finance Minister Rod Phillips released Ontario’s Action Plan: Protect, Support, Recover – the next phase of a comprehensive action plan to respond to the serious health and economic impacts of COVID-19. Ontario’s Action Plan now sets out a total of $45 billion in support over three years to make available the necessary health resources to continue protecting people, deliver critical programs and tax measures to support individuals, families and job creators impacted by the virus, and lay the groundwork for a robust long-term economic recovery for the province.
"The next phase of Ontario's Action Plan makes available every necessary resource to continue protecting people's health during the second wave of COVID-19 and beyond," said Minister Phillips. "We’re providing new support to those who have been hardest hit, including parents, seniors and small business owners, while making sure we are removing barriers to enable the necessary growth for job creation and Ontario’s long-term economic recovery.”
The 2020 Budget is laying the foundation for economic recovery across the province, including people in London, by bringing the city’s Business Education Tax rate to 0.88%, a 30% reduction. This will allow for savings to be reinvested for job growth and creation in the London region.
“By reducing BET rates in London, the provincial government is joining the City in signalling that our community is a great place to do business,” said Jeff Yurek, MPP. “I am thrilled that existing commercial property owners will benefit from these savings and look forward to seeing new companies take advantage of this attractive boost for London.”
“The harmonization of the Business Education Tax across the province will provide important economic relief to London businesses and strengthen our region’s economic potential as we continue to grapple with the challenges of COVID-19,” said Mayor Ed Holder.
Among the many financial challenges caused by COVID-19, businesses continue to bear fixed costs even while serving fewer customers, either because of public health restrictions or because it takes time for people to feel confident re-engaging with the economy. These costs are expenses that continue despite a business not operating at all or operating at lower than normal capacity and are effectively job-killing taxes.
Property taxes are one of the most unavoidable costs businesses face. In Ontario, there is currently a wide range of Business Education Tax (BET) rates across the province. This creates an unfair challenge for businesses operating in communities with higher rates, impacting their competitiveness. Ontario has heard loud and clear from municipalities and employers that as the province recovers from COVID-19, addressing this variation in BET rates would reduce regional tax unfairness and make the entire province more competitive.
As a result, Ontario is acting immediately to reduce high BET rates across the province by $450 million in 2021. This tax reduction will reduce all high BET rates to a rate of 0.88 per cent and represents a reduction of 30 per cent for the many businesses that are currently subject to the highest BET rate in the province. This provides relief now and in the future.
These reductions will benefit over 200,000 business properties, or 94 per cent of all business properties in Ontario. To ensure this measure does not have a financial impact on school boards, the Province will adjust payments to school boards to offset the reduction in education property taxes.
- Since June, employment in Ontario has risen by 838,000 net jobs and, as of September, employment reached 95.8 per cent of the February 2020 level.
- Ontario’s real GDP is projected to decline by 6.5 per cent in 2020 and rise by 4.9 per cent in 2021. Ontario’s economic growth is expected to continue after 2021, with real GDP projected to rise 3.5 per cent in 2022 before moderating to 2.0 per cent growth in 2023.
- The Fiscal Sustainability, Transparency and Accountability Act, 2019 (FSTAA) requires the government to publish a recovery plan in the event a balanced budget is not projected in the final year of the multi-year fiscal plan. The Act also recognizes the need for flexibility and provides the ability to respond to changing circumstances. Given the continued and unprecedented uncertainty and risks associated with the COVID-19 pandemic, the government is proposing amendments to FSTAA to pause the requirement to include a recovery plan in the 2020 Budget.
- Ontario was the first jurisdiction in Canada to release a fiscal outlook that reflected the impacts of the COVID-19 crisis in its March 25, 2020 Ontario’s Action Plan: Responding to COVID-19.