Montreal business costs lower than Toronto and Vancouver, but retailers don’t benefit

February 26, 2013


Verdun bookstore owner Philippe Sarrasin wasn’t wrong to question his commercial taxes.

A study conducted by KPMG last September compared overall commercial tax burdens in 55 cities within 113 countries around the world. While Canada fared well as a country, Montreal’s had the highest labour costs of the 16 Canadian cities mentioned. It also had the second highest commercial tax burden, right after Quebec City.

Utility costs are cheaper in Canada and the United States than they are in China and India, but Sarrasin’s bookstore isn’t a big user of hydro or water. Nor does he have much garbage.

“It’s mostly cardboard boxes, so I don’t mind having recycling pick-up once a week,” he said, when asked which city services he needs most. “The restaurants have a much harder time handling a week’s worth of garbage.”

The overall cost of doing business in Montreal is significantly lower than in other Canadian cities and in the United States and around the world. Unfortunately for Sarrasin, lower costs are due to extensive tax credits he can’t use, such as those for digital media development, manufacturing, and research and development.

To conduct its “Competitive Alternatives” study, KPMG authors used the United States average as the benchmark, assigning it a Total Tax Index (TTI) of 100. In this study, Canada compared favourably to the United States with a TTI of 59.1, which means that total tax costs in Canada are 30.9% lower than those in the United States. At 62.8, Montreal’s Total Tax index is the highest in the country, however. Australian, Asian, Brazilian and European cities are all significantly higher, with Sydney at $126.80, Tokya at $162.60, Sao Paulo at $146.80 and Paris at $187.10.

Sarrasin’s tax burden includes corporate income taxes—which are very low in Canada, capital taxes, sales taxes, miscellaneous local taxes and statutory labour costs in addition to property taxes. As we pointed out in our other story, property taxes in Montreal are higher than those in the rest of the country.

At 5.2%, Montreal’s corporate income tax is lower than the Canadian average, however. It is also lower than every other city except St. John’s, Fredericton, Moncton, Winnipeg and Trois-Rivières.

Montreal’s commercial tax rate come in at 8.5% overall, which is higher than most Canadian cities, including Toronto and Vancouver, although it is lower than Quebec City, Winnipeg, Prince George, Halifax, Fredericton, Moncton and Saskatoon.

At 24.2%, Montreal’s statutory labour costs are higher than all the other Canadian cities in the study, which is a shame for Sarrasin, given that service businesses like his are particularly affected by labour costs.

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Note: This article appeared on page 12 of The City edition of the Suburban on February 2.

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Tracey Arial

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Tracey Arial

Tracey Arial helps Canadians grow with notable nonfiction and urban agriculture.

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