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The city is one of the few Quebec municipalities charging a compensation tax to non-profit building owners who have a provincial exemption from paying municipal taxes.
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Mayor Valérie Plante’s administration says it’s ready to revisit the “compensation” tax that Montreal charges non-profit organizations on their tax-exempt shelters and transitional housing — if the organizations make the request.
“Our community partners do essential work with our population,” the mayor’s office said in a written declaration to the Gazette after the publication revealed this week that Montreal is one of the few municipalities in Quebec charging a compensation tax to non-profit building owners who have a provincial exemption from paying municipal taxes on their buildings.
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What’s more, the Gazette discovered the “compensation” rate Montreal has charged for decades — $0.50 per $100 of property valuation — is higher than this year’s general property tax rate of $0.4977 per $100 of valuation charged to homeowners across Montreal Island. The general tax rate has dropped from about $2 in the mid-1990s as property values have exploded.
“For us, in a time of crisis for vulnerable groups, it is a priority to support shelters and non-profits that offer temporary social housing,” the Plante administration said in the declaration provided by Simon Charron, a spokesperson for the mayor and city executive committee.
“The city significantly supports homeless non-profits financially, and has doubled its annual budget from $3 million to $6 million in the last two years. With this in mind, we are always open to studying new ways to support our organizations as effectively as possible.”
The city has never received a request to scrap the compensation tax, Charron said, “but we’re ready to sit down with organizations if they ask and discuss it.”
“I’d be happy to make the request,” Sam Watts, CEO and executive director of Welcome Hall Mission, responded when the Gazette relayed the response from the mayor’s office.
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“That’s a wonderful thing to hear. Sit down and discuss is a good start.”
Shelters like Old Brewery Mission and Chez Doris told the Gazette last week they were unaware that Montreal was one of the few municipalities in the province charging a compensation tax on their tax-exempt buildings.
By comparison, Longueuil and Laval send no tax bill to non-profits that have an exemption from paying municipal taxes on their buildings from the Commission municipale du Québec.
Under Quebec’s Act Respecting Municipal Taxation, buildings owned by non-profits and providing transitional — meaning temporary — housing can qualify for an exemption from paying municipal taxes. But buildings with permanent non-profit housing, even for low-income Quebecers, don’t qualify.
Longueuil says it knows the Act Respecting Municipal Taxation permits municipalities to charge “compensation,” but Longueuil chooses not to do so.
“The law provides that the city could request financial compensation from a tax-exempt organization (for use of municipal services), but the city chooses not to request financial compensation from these organizations,” a Longueuil spokesperson said in an email.
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Montreal city councillor Serge Sasseville said he was stunned to learn that Montreal taxes tax-exempt non-profits.
“The city must correct the situation. That’s clear,” said Sasseville, an independent who represents the downtown Peter-McGill district in Ville-Marie borough. “My reaction is that it makes no sense. It has to change.”
The situation for Chez Doris, which is in his district, “particularly touched me,” Sasseville said. “It’s … an organization that does exceptional work that needs funding. So, the compensation tax, I don’t understand why they have to pay that. And I don’t understand why organizations like Chez Doris pay the city of Montreal more than any taxpayer must pay. That does not make any sense.”
The Act Respecting Municipal Taxation states the “compensation” charged to tax-exempt non-profits “shall not exceed the general property tax rate” of a municipality where the general property tax rate is below $0.60 per $100 of valuation, as is the case in Montreal.
However, the Montreal civil service on Thursday defended charging $0.50 per $100 valuation as “compensation” to tax-exempt non-profits, even if the city’s general property tax rate is $0.4977 per $100 of valuation this year.
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The “compensation” replaces all the property taxes levied by the municipal council, Hugo Bourgoin, a spokesperson for the civil service, said in an email. That includes the general property tax, as well as special taxes for water infrastructure repair and road repair that have been levied since the early 2000s, a tax paid to the regional transit authority and any local borough tax.
“The ‘compensation’ is therefore lower than all of these taxes, whether for residential or non-residential property,” Bourgoin wrote.
The assorted taxes on top of the general property tax total about $0.16 to $0.20 per $100 of valuation, depending on the borough.
Bourgoin’s message also said the “compensation” is not a tax, even if it’s charged on property valuation, like property taxes, and the bill is sent to non-profit organizations at the same time as property tax bills with the same deadlines for payment.
“This is not a tax, but rather a compensation which replaces all the taxes which would otherwise be due for these buildings or parts of buildings,” Bourgoin wrote.
Welcome Hall Mission, like other non-profits, “is a net contributor” to Montreal, Watts said. His organization receives about $90,000 in grants from the city each year, but Welcome Hall Mission is paying Montreal $146,000 in “compensation” this year.
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James Hughes, president and CEO of Old Brewery Mission, said last week that his organization is paying $125,000 on its buildings for the “compensation” charged by Montreal.
The $125,000 would cover the salaries of two additional intervention workers in the organization’s transitional housing buildings, he said.
By charging “compensation,” Watts said, “you’re essentially taking money out of an organization that’s doing what needs to be done in the city, effectively filling the gaps that exist in the social network in the care for vulnerable people.”
It would cost the city and province more money in health and social services if the gaps weren’t filled by the non-profits, he said.
What’s more, the public’s donations to non-profits like Welcome Hall Mission are helping to pay the organizations’ compensation taxes, Watts said. So donors who already pay municipal taxes are in a sense being taxed twice, he said.
“The city’s not going to have any major calamity if they’re missing a few hundred thousand dollars in compensation tax,” Watts said.
“I don’t think that’s the end of the world for them.”
lgyulai@postmedia.com
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