You have to be something of a masochist to start or expand a business in Montreal, home to Canada’s highest commercial tax rates, stickiest red tape and least entrepreneurial business environment. After more than two years in office, Mayor Denis Coderre apparently has finally clued in, promising in February to start fixing some of these problems by yearend.

The issue is not a new one. Montreal has long had the highest commercial tax rates in the country: more than twice that of Calgary and 25% more than Toronto’s, according to a 2014 analysis.

And for the past two years, Montreal has placed dead last in the Canadian Federation of Independent Business’ “entrepreneurial ranking” of 120 cities, based on indicators that consider business ownership, optimism and government policy. And aside from taxes, long-suffering local business people also complain about endless roadwork and long waits for permits.

Then there are the tax discrepancies within the city. A city hall opposition party recently analyzed tax rates of chain stores and restaurants operating in various Montreal boroughs. That analysis found that a business pays 23 times more in commercial taxes for an outlet in one central borough – Plateau Mont-Royal – than in east-end Rivière des Prairies.

Coderre threw a bone to business in his 2016 budget, limiting the non-residential tax hike to 0.9% – about half the increase faced by homeowners. But the commercial tax rate is still four times higher than the residential rate.

Since Coderre took office, he has been trying to persuade the provincial government to give Montreal “special status” and “the means not to tax more but to tax better.” Details are sketchy: he also wants to take spending powers away from local boroughs. But, so far, nothing has come of these efforts to manage city finances better and diversify tax revenue, which presumably would allow Montreal to alleviate the tax burden on business.

While Coderre waits for those new powers, he is seeking other ideas. In February, he appointed a joint business and academic committee to provide a snapshot of Montreal’s competitiveness, an analysis of the challenges faced by business and advice on how to help spur economic development, with a focus on taxes.

Despite Montreal’s faults, the city does have assets that make it attractive for investors, says Anne-Marie J. Hubert, head of the joint committee. As an example, she points to the city’s pool of university students, the second-largest contingent in North America thanks to Montreal’s four universities.

She could have added bilingualism, affordable housing and low residential taxes to the list of Montreal’s pluses. “We rank well in international rankings, notably in terms of manpower, education and quality of life,” says Hubert, associate director for Quebec at consulting firm EY (formerly known as Ernst & Young). “That being said,” she adds, “we must ensure that in terms of taxation, we are also seen positively.”

Among other things, the committee will suggest how to attract workers from overseas and consider lowering business tax rates for neighbourhoods suffering from prolonged roadwork.

Montreal’s business community likes the committee’s tight deadline (recommendations are due in June; changes to be implemented by autumn). Hopefully, the report won’t gather dust on a shelf.

© 2016 Investment Executive. All rights reserved.