The small business tax cut
Open for business / taxes
The small business tax cut.
In 2022, Ottawa started giving small businesses a discount on the City’s share of their property tax. By 2023 it reached 15 per cent. It was the right idea. Then it was frozen.
Toronto started at the same 15 per cent. This February, Toronto raised it to 20.
Even when both cities were at 15 per cent, an Ottawa owner with a $450,000 property paid 28 per cent more than the same owner in Toronto. That’s according to the Canadian Federation of Independent Business. CFIB says the gap is now about 35 per cent.
In March, CFIB asked Ottawa to go to 25 per cent. In April, the City kept it at 15. The staff report said the savings are “unlikely to be a significant factor in job creation.”
A third of the Ontario small business owners CFIB surveyed say they would hire with more tax relief. Alex Lawson believes the people who sign the paycheques.
We can’t grow the base if we aren’t competitive.
Ottawa’s commercial tax base grew 0.04 per cent in 2025, then 0.31 per cent in 2026. Those are the City’s own numbers.
Business pays almost a quarter of Ottawa’s property tax. Over the last two years it brought in about four cents of every new tax dollar. When the base doesn’t grow, the rate goes up on everyone.
Toronto can charge business less because its base is bigger. Ottawa can’t fix that by standing still. It fixes it by being the city where it makes sense to open, hire and expand. More businesses mean more jobs and more competition for your dollar. That is how prices come down.
Ottawa got a C-minus from CFIB this year. Toronto beat us. This is part of how we stop losing to Toronto.
The plan: five commitments
No phasing. No half-measures. Ottawa moves from 15 to 25 per cent in Alex Lawson’s first budget, inside the Province’s 35 per cent limit.
The City’s share comes from new commercial and industrial growth and from efficiencies, not from raising the rate on other businesses.
Every City patio fee goes: the first-time review fee, the permit processing fee, the monthly rent for space on the street, and the café seating fee. Patios still need a permit and still have to meet safety and accessibility rules. A business that wants to put tables outside shouldn’t have to pay City Hall for the privilege.
Any tax policy change that raises a class’s taxes by more than 10 per cent in a year is phased in over at least four years, with written notice to every owner the fall before.
Review eligibility with CFIB, the Board of Trade and the BIAs so the discount reaches the businesses it was built for.
Same City Hall, different rules.
In 2025, City Hall ended a tax class that had existed since 2001. Parking lots and vacant land had been taxed 32.5 per cent below the regular commercial rate. Council ended it in one year, with no phase-in. That meant 1,923 properties, $10.7 million, and increases of 41 to 46 per cent. The owner of a bowling alley near Wellington told Alex the tax bill went up about $40,000. The average homeowner saved four dollars. The City’s own report listed “increasing the costs of parking” among the reasons.
City Hall knows how to phase in a change when it wants to. It phased in the small business discount over two years. It is phasing a tax cut for apartment buildings over four years. It phased out tax capping over four years. Parking lot and vacant land owners got one.
Over four years, that increase would have been about 10 per cent a year. For the bowling alley, that is roughly $9,000 to $12,000 a year instead of $40,000 at once.
A quarter of one year’s growth.
The 15 per cent discount is worth about $12.6 million on the City side in 2026. Going to 25 per cent adds about $8.4 million a year.
That is about a quarter of one year’s new tax growth. Ottawa added $37 million in new growth in 2026.
Under most commercial leases the tenant pays the property tax, so the tenant gets the cut. For a $450,000 property, CFIB estimates the move from 15 to 25 per cent saves more than $1,300 a year. Every dollar stays in local businesses: wages, hiring, and keeping the doors open.
A Lawson council says yes.
The tax cut works alongside Report Red Tape, Open During Construction, Free Up Parking and Jobs and Growth.
Toronto moved. CFIB asked. City Hall said no. A Lawson council says yes, in the first budget.
Read the full plank, with every source (PDF)
Ottawa deserves better.