Revised land tax in Hamburg: Property owners face a lower burden than initially anticipated
In the heart of New Hamburg, a property tax reform has been enacted, with the city's commercial landscape bracing for change. However, it's the businesses on the outskirts that may feel the brunt of the new tax regime, due to a combination of infrastructure limitations, ongoing municipal financial crises, and assessment practices.
Senator Andreas Dressel (SPD) has expressed satisfaction with the reform, stating that it aims to increase fairness in property taxation by addressing the discrepancy between old and new properties. Yet, concerns have been raised about the differential impact on businesses located on the outskirts compared to those in the city center.
The Federation of Taxpayers, along with the Left, finds it incomprehensible that a business in the city center is treated equally to a craft business on the outskirts. This is largely due to the infrastructure challenges faced by outskirt areas like Wilmot Township, which includes New Hamburg. With many older tar and chip roads, gravel sections, and limited public transit, businesses on the outskirts struggle to operate efficiently and attract customers.
Moreover, the financial strain faced by businesses on the outskirts is exacerbated by proposed tax hikes. Wilmot Township citizens recently opposed a 51% property tax increase due to an ongoing financial crisis in the municipality. Higher taxes on commercial properties outside the core urban area could further burden businesses already facing operational challenges.
Another factor contributing to the heavier impact on outskirts commercial operators is the assessment system. Ontario property assessments, provided by MPAC, currently rely on values from January 1, 2016. This may not reflect recent commercial market shifts uniformly between city center and outskirts, leading to disproportionate tax burdens if commercial land values or improvements outside the city center are assessed differently from those downtown.
In contrast, businesses in New Hamburg's city center typically benefit from higher foot traffic, better infrastructure, and proximity to other commercial services, potentially allowing them to better absorb tax increases. Conversely, businesses on the outskirts tend to be more dependent on vehicle access and have fewer complementary services nearby, making them more vulnerable to cost increases like higher property taxes.
Despite these concerns, Senator Dressel asserts that it is absurd to deduce that commercial operators on the outskirts are disadvantaged compared to inner-city companies. He explains that for commercial properties, no distinction is made by location, only the size of the area counts for the tax. However, the expected 503 million euros for 2025 includes taxes for undeveloped plots of land, which may further skew the tax burden towards outskirt areas.
As the property tax for 2025 is expected to be 498 million euros, an increase from the 447 million euros set for 2024, the actual amount could decrease significantly due to objections and hardship cases that have not yet been taken into account. The Senate's promise is that no more will be collected than was estimated before the reform.
The reform's aim was not to maintain the exact same property tax revenue as previous years, but to address the much too low taxation of old real estate, as determined by the Federal Constitutional Court. The reform was initiated to increase fairness in property taxation, yet it seems that the implementation may disproportionately affect businesses on the outskirts.
Xenija Melnik, economic policy spokeswoman for the Left, argues that large companies in the city center should not benefit from an unfair tax relief. The Left criticizes that commercial operators on the outskirts pay more after the reform, as their previously favorable land is now taxed like commercial areas in the city center.
As the new Hamburg property tax settlement unfolds, it's crucial to monitor its impact on businesses across the city, ensuring that the reform's aim of fairness is achieved without disproportionately burdening those on the outskirts.
- The properties located on the outskirts, including those in Wilmot Township, might struggle under the new property tax regime due to the combination of infrastructure challenges, a potential 51% property tax increase, and an assessment system that may not reflect recent commercial market shifts.
- The Federation of Taxpayers and the Left have raised concerns that businesses located on the outskirts might bear a disproportionate tax burden compared to their city center counterparts, as a result of the property tax reform, due to factors such as infrastructure challenges, higher taxes, and a seemingly unequal assessment system.
