Thank you very much, Mr. Chairman.
As the only non-national-based organization to speak today, the Toronto Association of Business Improvement Areas is pleased to bring you our perspective. TABIA represents 25,000 small businesses—main street businesses, mom-and-pop stores—in over 63 neighbourhoods, BIAs, within Toronto. There are three topics for consideration: the change in main street retail; marginal stores and McJobs; and supporting the cities.
Toronto is a city of many neighbourhoods. The condition of our main street retailers reflects the health of the residential streets around them. The neighbourhood merchant offers a green alternative to driving to power centres with acres of free parking. We are resilient, thrifty, and creative, so there are many successes. Neighbourhood BIAs try to recruit certain types of retail that provide the diversity needed to protect their marketplace, and small retailers are quick to adopt environmental and energy-saving technologies.
Successful retail neighbourhoods include a clustering of stores of similar items, such as boutiques and hand-crafted or specialty items; professional services, which used to be located upstairs and are now in storefronts; and local family restaurants or coffee shops. These form the typical successful retail strips, and I hope you live near a successful neighbourhood retail strip.
I'm sure you all understand “Wal-Martization” and the massive change in retailing this has brought. I worked with others in the downtown to halt the construction of a big-box retail store on the waterfront in 1999, and this gave me an insight into the impact of change that big-box retail has brought to our city. 75% of the retail dollars are now spent in big-box power centres, malls, and chain stores.
Mom-and-pop stores and the boutique neighbourhood merchants are under colossal pressure. The massive change in retail has left the main street businesses with a whole lot of outmoded, old-style, commercial architecture. In a number of cities we are over-stored. We're locked into an architectural structure that is not well suited to compete in today's retail, large-scale format with small profit margins.
So here we are with some successful strips and a lot of old storefront architecture no longer suited for retail. We'd like to see the federal government look at this issue. There doesn't seem to be acknowledgement of this displacement—no urban planning schemes, no programs to consolidate property, and no property tax breaks for the little guys. If you survive long enough to sell the shop—the merchant's dream retirement—the sale is capital taxed to death. We understand there is some difference with farm sales. There's no unemployment insurance if you go out of business, and you've already lost your investment. I don't know of any retraining programs for self-employed merchants.
In Toronto we're experiencing punishing tax bills. A small commercial store assessed at $300,000—that's under 900 square feet—must pay $14,000 just in annual property taxes. To make $14,000 you have to sell a lot of sushi just to pay the rent. We feel the city is reducing its own tax base in this switch of retail format. It's our impression that the new retail format pays less property tax per square foot, employs fewer people per dollar sale, and rarely becomes involved in the local social issues or marketing efforts.
Marginal stores and McJobs are the not-so-pleasant side. Store vacancies, chain stores, and other marginal businesses fill in storefronts in poorer retail strips. Many storefronts are more valuable for residential use than business. Marginal stores provide just wages to those who work in them, and they're fragile.
Many marginal stores are often chains earning the employees wages and a few dollars more for the owner of the chain. So if you have 10 marginal stores you might make a success of it. Each of these marginal stores, however, offers little payback or involvement in the neighbourhood. On the other hand, an owner-operated neighbourhood business is often personally involved in the social life of the area.
In supporting cities, strong cities make a strong country. One of the reasons tax bills are so high is the poor funding of cities where most Canadians now live. The municipality is a child of the province, but the child is living in poverty. We must look at the federal government to develop direct ties to our cities.
Maybe equalization and other transfers could be directed to urban infrastructure. Toronto's social services are mandated by the province but not funded. The city is awash in people begging and sleeping on the streets, which crushes tourism and the people's own self-respect. It would be very helpful if the government would explain how the Charter of Rights and Freedoms prevents us from intervening, even with medical and social assessments, when people choose to sleep on our public sidewalks.
Looking at this problem, which is killing tourism in the downtown, we find there are no job programs for these homeless people and the poor or elderly, and no housing initiatives. I have recently heard of a homeless partnering strategy that was announced last spring, but I haven't seen a sign of it.
Employing a shelter person or any poor person in local retail could be freed from the added cost of workmen's compensation, EI payments, and the paperwork that implies to the mom-and-pop store. Many low-income urban residents have no alternative but to work under the table or beg. Youth with parents on welfare must hide their income under the table or they see their mother's cheque reduced. These people should be supported with specific government employment programs.
Lastly, many of our merchants talk about GST as a problem every day at the till—its visibility, I guess.
These are some of the main street problems the federal government might address. Thank you.