The City and business community in St. John’s, Newfoundland required an outside party to review, report on and assist in implementing the tax reform.
The City of St. John’s operated two assessment-based commercial tax regimes, business realty tax and business occupancy tax. Due to inefficiencies within the system, the City wanted to eliminate business occupancy tax, but would only do this with the support of the business community. The elimination of business occupancy tax would require the doubling of business realty tax rates to make up for loss of revenue and could also cause a serious shift in weighting of the tax burden. The City and business community required an independent report to study the proposal and present recommendations for implementation and mitigation of potential issues.
PHASE 1 - Research Study
Date: Assignment commenced Q1 2007, completed Q4 2008
Scope of Work: The St. John’s RVA office of Altus Group was selected through a competitive process by the City to undertake the study.
The study involved:
- Research of similar tax reforms in other Canadian jurisdictions
- Interviewing municipal participants
- Leveraging Altus Tax consultants expertise across the region
- Determining positive and negative impacts over the duration of the tax change
- Undertaking several ‘focus group’ meetings with commercial property owners and other interested parties within the City
- Building a taxation model that replicated the assessment and tax flows in order to identify weighting shifts of the tax burden within the various business occupancy tax categories from before the tax reform to after the tax reform
The model integrated the entire City commercial assessment of $2,475,000,000 and tax flows of $24,240,000 from business realty and $21,066,000 from business occupancy.
The study identified major issues that would result from the tax reform and made recommendations of ways to mitigate such issues.
The report was presented to the City and the taxpayer committee in 2009.
PHASE 2 – Acting in Advisory Capacity to Tax Blending Advisory Committee
Date: Assignment commenced Q3 2009, completed Q1 2011
Scope of Work: Having authored the consultant report in Phase 1, Altus Group consultants were requested to provide ongoing advice to the Tax Blending Advisory Committee made up of City representatives and taxpayers, whose task it was to determine if, and how, the City should implement the proposed tax reform.
The assignment included:
- Attending all meetings of the Advisory Committee to answer ongoing questions and provide feedback to issues as they arose
- Updating the assessment/tax model based on a new assessment roll providing formal presentations to City Council (in camera), the Board of Trade and other interested parties
- Assisting in drafting a City By-law addressing issues relating to the new blended business realty tax
- Advising on creating new taxation policies including quarterly billings with payments in arrears, vacancy allowance claims, tax allowances for charities, for rent free periods, for bad debts, building base models for how the allowance systems would work, dealing with mixed-use properties and home business taxation, etc
- Advising, along with Ottenheimer Baker, on draft legislation changes required for implementation
The assignment was completed when the Advisory Committee produced recommendations and presented the By-Law draft to City Council in October 2010.
PHASE 3 – Imbedding with the City of St. John’s to Assist in Tax Reform Implementation
Date: Assignment commenced Q2 2012, completed Q1 2013
Scope of Work: The City of St. John’s requested Altus Group consultants to assist with internal implementation of the tax reform as soon as the decision had been made to move forward with elimination of business occupancy tax as of December 31, 2012.
Altus Group’s role was to:
- Provide a project management plan for the internal departments that would be involved in tax reform implementation
- Introduce the tax reform and implementation plan to all managers and other personnel
- Meet with all key City personnel and understand the scope of issues that would have to be dealt with through the implementation process
- Most importantly, deal with the City ERP software issues, meeting with their software developers (MS Govern) and determine the extent of changes required to the system, if and when changes could be addressed
- Advise on technical issues relating to aligning the existing ERP system with needs of the new tax system and needs of the system to include new taxpayer tax allowance claims
- Advise on all communications to the public
- Coordinate implementation between departments
- Build a software database to handle all forms of tax allowance claims that would be an add-on to the existing ERP system and that can be accessed by taxpayers on-line through the City website. This database build task was handled by our Altus Group Quebec City office personnel who specialize in assessment and statistical database systems