“For nearly a decade I have advocated for small business because I believe they are the backbone of the Winnipeg economy,” said Brian Bowman during the municipal election. “Anything that I can do to turn Winnipeg into one of the most inviting communities in Canada to start or run a small business is good for all of Winnipeg.”
To that end, Bowman promised to increase the small business tax credit, reduce the business tax rate and hold an annual small-business summit. Unfortunately, at the time he said nothing about a thousand-dollar patio license.
So it was no doubt a surprise to the city’s many restaurants, bar and coffee shop operators when the Mayor — champion of small business that he purports to be — tabled the 2015 budget. In it, buried midway through page 56 of the SECOND VOLUME of the budget was a $1160 patio license fee, which in conjunction with other new and increased fees are supposed to generate $45.3 million in revenue (4.6 per cent of the estimated $994.1 million). No doubt every dollar counts when you’ve pledged to complete every leg of the city’s bus rapid transit project by 2030. But still.
What is especially problematic about this seemingly innocuous fee is its regressive nature. The fee would appear to be flat: no matter the size of the patio, type of service available on it or amount of money it generates, every business wishing to install one must fork over $1160. In what way does such a licensing scheme help small businesses? If anything, like all forms of regressive taxation, it unfairly penalizes those at the lower end of the income-generating spectrum.
No doubt $1160 is chump change to the multi-million dollar national restaurant chains that dominate suburban shopping mall parking lots (the views are stunning!) or those with expansive patios with plenty of income-generating seats. How though does such a pricing scheme help the truly small businesses — the independent coffee shops and cafes wishing to install a table or two — that have chosen to operate in denser, urban areas where the only space available for patios is the sidewalk in front of their shops? It doesn’t.
Don’t forget: businesses wishing to operate a patio already pay one-time application fees plus additional monthly fees when their patios are in operation. The proposed patio license contained within Bowman’s 2015 budget is an additional fee on top of those existing charges—and it is not yet clear whether or not this additional fee is an annual one.
More galling still, Bowman also pledged during his campaign to “stand up for downtown Winnipeg.” Among other feel-good promises, the Mayor said at the time that he would develop a seasonal pedestrian mall in the Exchange District. Presumably the intent of such a move, as with Ottawa’s Sparks or Montreal’s Prince Arthur, was to create a bustling strip of sidewalk cafes and patios. All of which would now be required to purchase a patio license. No wonder Bowman promised to stand up: there won’t be anywhere for him to sit down.
To his credit (?), Bowman’s first budget does indeed reduce the business tax rate — by a tenth of a percentage point, from 5.7 to 5.6 per cent. And he did increase the small business tax credit to the promised $30,000. But the patio license fee, if passed, undermines those meager efforts. It’s also plainly hypocritical.
Yes, the City is in dire financial straits. Like all major metropolitan areas in this country, Winnipeg is struggling to support itself through the antiquated means the Province has legislated it can do so. Property taxes, frontage levies, fees and licenses are regressive, stop-gap measures that will never adequately fund the rising costs of sustaining our expanding and aging urban communities. Nevertheless, doubling down on these measures instead of holding the Province to account; looking for more progressive, means-tested solutions; sparking a meaningful conversation about the powers afforded to our municipalities would surely do more to create that friendly environment for small businesses than the tinkering we see in Bowman’s 2015 budget.
Sure, such pie-in-the-sky stuff does little to balance today’s budget. Talk is cheap after all. Which is why, at the very least, such a patio license fee, if it must be levied at all, ought to be tied to something that in some way corresponds with the value of operating that patio. It may still be a fee, true, but at least it would be a fairer one — and one that just might help those genuinely small businesses Brian Bowman has apparently been going on about for over a decade.
Originally published on Spectator Tribune.