Memo on 100% Tax Increase: Yonge Street Small Business Association
- Most Small Businesses are tenants who have leases comprised of taxes, maintenance costs, and rent. On downtown locations like Yonge Street near Bloor, taxes can comprise up to 60% of gross monthly rent
- Leases are contracts which most businesses have to sign and can be for between 1 to 10 years, averaging about 5 years.
- The business is locked into paying whatever the taxes are by the lease.
- In the past, taxes might increase 5% or 10%, amounts that a business can absorb.
- If the business can’t pay the sudden 100% increase, because of the contractual nature of the lease, they can’t just walk away. The landlord can sue them, they can lose their house and have their business will have to go bankrupt.
- Commercial leases have no protection like residential leases and a landlord can change the locks in 15 days if the small businesses (or lessee) haven’t paid the rent.
- To survive, the only thing most companies can do is lay off staff, since this is the only short term way to save money. Not because they want to lay people off, but just to have enough money to pay the new tax increase.
- It is impossible to increase sales or increase prices to cover sudden tax increase of this magnitude. Most small businesses are already having a difficult time and are just getting back on their feet after the 2008 major recession.
- There needs to be a change in how assessments are done. New assessments should be on the market value of the new 60-storey building, newly constructed condos, and generating huge tax revenues. Not on the potential value.
- It is unfair to charge small remaining buildings with tenants who have been there for many years at these same rates.
- Is the City deliberately trying to drive hundreds of Yonge Street small business owners out of business? This tax will force them to lose their homes and savings and face bankruptcy.
- Is the city deliberately trying to destroy the jobs of thousands of ordinary people working on Yonge Street who are already just barely getting by?
- Landlords are in a bind as well. Once they lose their tenants, new tenants are not going to rent their spaces at these high rates, especially when a well-established business already cannot pay.
- However, the legislation has recently changed, so the there is no tax reduction for unoccupied spaces, so the landlords will be forced to sell to speculators or lose their properties.
- People of Toronto have enjoyed the fact that there were a lot of shops and small companies providing goods and services on Yonge, which made it an interesting, safe, and vibrant community.
- This is what Jane Jacobs was all about – and yet with this move, the City is setting up a situation where it will have a downtown core which loses all its distinctive local, owner-operated small businesses.
- If this is a deliberate plan to get rid of all these small businesses, then the City should be honest and forthright.
- If this is not the intention and this is an unintentional bureaucratic error, it is urgent that it is fixed immediately, otherwise, hundreds of businesses will close, likely there will a few suicides by desperate people facing total ruin and their employees who lose their jobs.
Do we want Yonge Street to be boarded up and to lose all its pedestrian traffic and vitality?
If there are any questions or suggestions, please call John Anderson 416-629- 2169 or email us at firstname.lastname@example.org