OTTAWA -- With many pandemic-related financial supports for small businesses set to expire in the coming months, the city of Ottawa is offering some a break in their tax bill to soften the blow.

The Finance and Economic Development Committee approved a motion on Tuesday proposing a new Small Business Property Tax Subclass.

The new subclass applies to smaller commercial and industrial properties under 25,000 square feet, many of which are occupied or owned by small businesses.

Small business advocate Michael Wood applauds the city stepping in to help small business owners.

“Right now we are looking potentially Oct. 23 when the rent subsidy coming to an end and the wage subsidy coming to an end, so at this point I know small business owners are just grateful for anything that is coming there way,” Wood said. “The outlook of a 15 per cent tax cut for small business is great.”

The 15 per cent reduction in property taxes will be offered in two stages. The first 7.5 per cent will be applied to the 2022 tax bill, and the second 7.5 per cent the following year. It should save many landlords and small business thousands of dollars each year.

More than half of the 11,000 commercial and industrial properties in Ottawa will qualify for the new tax class. City staff say that could lead to an estimated $9.9 million in revenue loss for the city.

Wood recognizes the tax break may not reach some small businesses who rent space but says most commercial leases share the cost of property taxes.

“Most landlords charge triple net rent, where the property tax is broken down and the business pays the tax or a portion of the tax,” Wood said. “So the hope is with the reduction in the property tax they will pass on to the business owner themselves.”

The revenue loss to the city will be made up in two ways, according to staff.  First, the city will cancel the discount for vacant properties, which will bring in $1.4 million.

The remaining lost tax revenue will be covered by owners of larger properties, who do not qualify for the new tax bracket.

The city estimates these owners will see their taxes increase by an average of 1.46 per cent due to this tax change.

The new small business property tax subclass will go before full council for a vote on Oct. 13.