In today’s economy, choosing when and where to start a small business can be a daunting task. Every city has its own nuanced ecosystem and amalgamation of people from different cultures, lifestyles, interests and wealth. Regardless of social differences, it is legitimate that no city could flourish without people successfully pursuing business opportunities.
This is the reason CFIB takes a regular look at Canada’s urban communities and how well they mesh with the interests of local business owners. This year Canada’s 125 largest urban centers were assessed and compared on 13 metrics of self-employment demographics, small business sentiment and local tax and regulatory policy.
As influences are forever changing with shifts in the economy, a multitude of factors must be considered when organizing such a list. When consolidating the full range of factors, we again see resource regions in the North and Western Canada high on the list along with mid-size regional centers in Central Canada. Top ranking cities include Whitehorse, Winkler, Man., and Grande Prairie, Alta. Further east, Victoriaville, Rimouski, Rivière-du-Loup — all in Quebec — and Collingwood, Ont., also rank high. Large urban areas tend to finish farther down the list, but the best in that group include Kelowna, B.C., Sherbrooke and Trois-Rivières, Que., and the periphery of communities around Montreal.
Mega cities like Montreal, Toronto and Vancouver typically to do well on high levels of self employment, but quite poorly on local tax environments, which reinforces the impression that suburban peripheries are more hospitable places for start-up ventures because they offer the advantages of large markets, but at considerably lower business costs. Relatively strong economies in Quebec and British Columbia, reflected by healthy income levels, expansion plans and business sentiment, pushed many communities there up the rankings.
The government also plays a role in entrepreneurial barriers. Local governments may have minimal influence on the overall economy; however, they have power over tax and regulatory bylaws. Local property tax is a particular problem for firms of all sizes, but especially for small ones. In the cities of Montreal, Calgary and Vancouver, for example, municipal property taxes on commercial land and buildings are more than four times higher than on equivalently valued residential properties.
Studies looking at the range and level of city services consumed find that residents receive $2 in services for every $1 in property tax paid while businesses receive $1 in services for every $2 paid. Taxes on industrial property are even steeper. In Ontario, it is not so much city governments, but the provincial government that is the bigger devil in the way it has loaded education property taxes on to businesses—in some cities by almost a seven-to-one basis. At a time of high profile business downsizing across the country, low productivity growth and stalled capital investment, it is surprising and disappointing that more eyes have not been cast towards the role governments play in the local economic picture.
Starting a small business is a gamble with one’s capital, time and effort. The process needs to be cost-efficient and short in time when it comes to approval processes, assuring that more people will take the entrepreneurial leap and help their communities flourish in their development. While we recognize more can be done, we celebrate and congratulate the communities that appear to be having the most success in supporting entrepreneurial cultures.