As a result of consistent lobbying by the London Chamber of Commerce and the Ontario Chamber of Commerce, the provincial government has announced a plan to reduce the wide variation in Business Education Tax (BET) rates throughout the province.

London Business Can Look Forward to 2009 Tax Bill

11 Apr 2007

author: Gerry Macartney, General Manager & CEO, London Chamber of Commerce

Business owners in London should take a good look at their property tax bills because in a couple years they'll look substantially different.

As a result of consistent lobbying by the London Chamber of Commerce and the Ontario Chamber of Commerce, the provincial government has announced a plan to reduce the wide variation in Business Education Tax (BET) rates throughout the province.

Although the plan, released in last month's Provincial Budget, will not completely harmonize rates in every community in Ontario, it will make a dramatic improvement in the fairness of the system over time by lowering high BET rates to 1.6% by 2014, which is just fractionally more than the lowest rates in the province and below the current average rate of 1.85%. Effective immediately, all new industrial and commercial construction will be given the ceiling rate of 1.6%. (Those already assessed below 1.6% will remain at the lower rate.)

Since 1998 businesses in Ontario have been paying varying rates (while residential property owners pay a flat rate) for an education system that is funded by the province on a set formula – with no benefit to local school boards from higher local rates.

Businesses have paid on average six times as much as residential property owners and sometimes much more than a similar business in the next municipality. London's commercial businesses for instance are charged an education tax rate of 2.44% of assessed value while their counterparts in Barrie are charged only 1.56%, in Hamilton 1.79% and in York Region only 1.49%. These high variable rates have been inhibiting economic development and investment in technology and job creation.

It's difficult enough for businesses in London to compete against global market forces around the world, much less having to compete against municipalities right here in our own province. These variable rates have hurt London's chances to compete on a level playing field with areas such as Barrie or Essex County or Peel Region all of whom have a significantly lower BET.

As an issue affecting small and large communities, the chamber network in Ontario identified it as the number one tax issue facing business in advance of the spring budget. The London Chamber of Commerce and other chambers of commerce in the province raised awareness of the issue with provincial politicians, members and the media.

Early in March, the Ontario Chamber of Commerce presented the Minister of Finance, Greg Sorbara, with its commissioned, third party assessment of the return on investment of a harmonization of the rates. It clearly demonstrated that lower rates would lead to increased output and productivity and more jobs for people in Ontario.

That information was published almost exactly in the provincial budget in March and the chamber network was recognized for its leadership on this issue.

Businesses in London will save an estimated $34 million dollars (34%) each year when the BET rate reductions are fully implemented in 2014. That's $34 million more to invest in their businesses which will lead to increased productivity and more jobs.

This announcement is a major step forward for businesses in Ontario and evidence of the power of the chamber network. While the London Chamber and the Ontario Chamber of Commerce will continue to push for complete harmonization of BET rates, businesses in London can, for a change, look forward to their 2009 tax bill.

← Return to reference library