Property tax policy has become a flashpoint in municipal politics across Canada this fall, with disputes ranging from the gap between commercial and residential rates in Atlantic Canada to mayoral races in Toronto and Ottawa fought partly over who pays what and why.
A new report from the Canadian Federation of Independent Business (CFIB) examined 80 municipalities across the four Atlantic provinces and found that in nearly every one, commercial properties face higher municipal tax rates than residential properties of equal assessed value. The gap is largest in Nova Scotia, where commercial properties face municipal tax rates 146% higher than residential ones, followed by Prince Edward Island at 142%, New Brunswick at 67% and Newfoundland and Labrador at 55%. In Newfoundland and Labrador, once municipal business taxes tied to assessment are factored in, the average effective multiplier climbs from 1.55 to 3.20.
“Two properties can be worth exactly the same amount, use many of the same municipal services, and yet the business property gets the bigger tax bill,” said Frédéric Gionet, CFIB’s Atlantic Director, calling it “a tax penalty on doing business.”
Small Businesses Say the Bill Shapes Decisions
CFIB’s findings show the burden weighs most heavily on the smallest firms. Among businesses with fewer than five employees, 31% say property tax eats up more than 10% of operating costs, and 40% say it has significantly hurt profitability. Among businesses reporting a negative impact, 21% delayed or cancelled an investment, 20% delayed or cancelled an expansion, and 18% cut staffing or hours. Gionet noted that “the bill arrives anyway” regardless of whether a business has a good or bad year, and CFIB is calling on municipalities to reduce, and eventually eliminate, higher commercial rates, arguing a more balanced structure could spread the same total levy more fairly rather than necessarily cutting municipal revenue.
Commercial vs. Residential Property Tax Premiums in Atlantic Canada
Halifax Flags Inequity in Its Own Assessment System
In Nova Scotia, the debate over fairness extends beyond commercial-residential splits. Halifax regional council voted 12-5 to ask the province to review the capped assessment program, which limits annual increases in a property’s taxable assessment even as market values rise faster. A city staff report found 79% of taxable Halifax properties are capped, meaning the remaining 21% — including new homebuyers and large apartment buildings — carry a disproportionate share of the tax burden. Coun. Shawn Cleary pointed to cases where similar homes on the same street pay vastly different bills, citing one example of $8,000 versus $4,000 depending on how long a property had been capped.
The report found that removing the cap would not increase total city revenue but would redistribute the burden, with about 16,000 homeowners paying less. It estimated that scrapping the cap this fiscal year could have let Halifax lower its urban residential tax rate roughly 24%, from $1.135 to $0.854 per $100 of assessed value, and would have saved apartment buildings with four or more units $16,200 this year, or $519 per unit. Coun. Sam Austin suggested smaller fixes, such as removing the cap for vacation homes, might be more politically feasible than eliminating it outright, while staff cautioned any major change should be phased in to avoid sudden tax spikes.
Toronto and Ottawa Mayoral Races Turn on Tax Pledges
In Toronto, property taxes have become a central campaign issue ahead of the Oct. 26 municipal election. Candidate Brad Bradford has pledged to freeze property taxes for one year for every home and business, followed by increases below inflation for three years, arguing the city has “recurring room” in its budget — pointing to about $5.6 billion budgeted for the property-tax-funded portion of the 2025 budget against roughly $5.5 billion actually spent, with a similar $130-million gap in 2024. Incumbent Olivia Chow has pledged to keep increases “at or around” inflation, defending past hikes of 9.5% in 2024, 6.9% in 2025 and 2.2% this year as necessary to protect services, saying the city found about $700 million in savings last year. Chow has also proposed property tax breaks for independent grocers worth up to $5,000 annually — half of what a large chain would pay — building on an existing small business property tax subclass discount that council raised from 15% to 20% in February. Candidate Chris Alexander has also pledged no increase in a first year followed by below-inflation hikes.
In Ottawa, mayoral candidate Alex Lawson has promised to move to eliminate the city’s vacant unit tax at his first council meeting if elected, arguing the 4,140 properties found vacant out of 327,967 required to declare — about 1.3% — do not justify the program’s administrative cost. Incumbent Mark Sutcliffe says he would not eliminate the tax but would push to streamline it, while candidate Jeff Leiper has vowed to keep it, citing more than 1,600 units returned to the market and an estimated $400 million in unlocked housing supply tied to the levy.
Together, the disputes illustrate how property tax structures — from commercial-residential rate gaps to assessment caps and vacancy levies — are increasingly contested as municipalities balance revenue needs against affordability and fairness concerns raised by businesses, homeowners and councillors alike.
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