Friday, May 13, 2016

What a Mess


Well, the good news is that the province amended the building code so that Home-based business owners don't need to spend their children's education funds to turn their homes into commercial occupancies.  The bad news is that it really doesn't matter.  No home based business owner in their right mind is going to come up from the underground if they know that the minute they do they will be dinged with commercial property taxes. We have no hope of growing our small business community until we realize that charging home-business owners commercial property taxes is a horrible idea.

Do you earn $8,000 a year painting pictures?  Are you a writer with a separate home office? Are you a consultant, translator, potter or hairdresser?  This means you, too.  It does not make a damn difference if anyone comes into your house or if you hang a sign.  It only matters that you are a self employed person working from home in a separate room.  Trust me on this one.  If you don't believe me call PVSC.   Now, raise your hand if you plan to tell your municipality that you operate a home based business.........I'm waiting........Right, that's what I thought.  You are having a hard enough time paying $20 for a bunch of grapes.  Not ready to spend another $700/yr on property taxes?  I totally understand.  Don't do it.  It's even worse than you think.

You see, when real commercial properties in real commercial zones are taxed, they get to factor in how much income the building generates into the equation.  But in a residential zone you don't get to do that.  So, let's say that there is an owner occupied business on the busiest street in town and they just aren't making much money yet, well they can use their lack of income to adjust the assessed value of their property.  Meanwhile, the room in your house used for your business is taxed only on the residential value of your home.  So, your little sock knitting business in your home, way out on the outskirts of town, where you have to shovel your own street,  might actually be paying more commercial property tax per square foot than a business in the heart of the commercial zone.

Even without this income adjustment it's a big mess.  If you are being charged commercial taxes, you should be able to compare your business to other businesses to make sure that your taxes are fair.  But guess what?  You can't.  You can only compare your business to other homes in your neighbourhood.  So, if the airplane parts manufacturer is paying less per square foot than your little start up, there's not a thing you can do about it.

So, who is winning here?  Are the municipalities winning?  How many permitted home businesses are there?  How many unpermitted home businesses are there?  Are municipalities actually making any significant amount of money on the handful of home businesses that are operating legally?  I won't leave you hanging.  The answer is no.  I'd be surprised if there are five permitted home businesses in Lunenburg, Trying to find all these hidden businesses, so that commercial property taxes can be applied isn't going to work either.  That will put people out of business.  That's a bad thing, by the way. 

You know that expression forward thinking?  That is what is required here.  Support  businesses when they are small and you give them a chance to grow.   Look ten years into the future.  What we are doing now is penny wise and pound foolish.  There is a real, honest to goodness crisis in Nova Scotia.  The old folks are dying, the young folks are leaving and new people aren't coming fast enough to replace them.  It's time for government to look past the tips of their noses.  Our tax legislation needs to say the same thing as our lovely new building code amendment.   Houses that use less than 25% of the home for a business are residential uses only.  We did it for Bed and Breakfasts, now let's do it for all the rest of us and for the future of Nova Scotia.  Sheesh. 


1 comment:

  1. A rethink is needed for the survival of NS coastal towns. This would be a good place to start.

    ReplyDelete

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