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Greater Victoria, BC News

ARTICLE

Date ArticleType
1/27/2017 Published Article
Commercial tax ratio is unfair to businesses

Further to the Times Colonist editorial, “Guard against unforeseen taxes” in its Sunday edition, the Greater Victoria business community has been expressing its frustration for years about their property taxes. Many say that local governments are taking advantage of non-residential property owners. Some say it is because businesses have lost their municipal vote, and that non-residential property taxes are taxation without representation, an issue worth considering given how many business owners live and work in different municipalities.

As the voice of Greater Victoria businesses, we urge Mayors and their Councils to do all they can to ensure - at the very least - that any overall property tax increases do not exceed expected inflation and that the ratios between property tax classes does not increase.

Property tax rates vary by class of property: residential, industry, commercial/business, utilities, supportive housing, farming, non-profit, and recreational, etc. The difference between residential mill rates and non-residential can be substantial; in Greater Victoria municipalities, the difference can vary from more than double to quadruple.

In the City of Victoria municipality, for example, the 2016 mill rates were 6.8297 for residential and 21.4646 for commercial, for a ratio of 1 to 3.1. That means in 2016 that an average City of Victoria resident would have paid $3,737 in property taxes (before any grants) on a residence valued at $547,200, while a business would have paid $11,745 on a commercial property of the same value.

The rationale for the difference is unclear, raising the question whether a non-residential property owner in Victoria really consumes triple the tax-supported services of a residential?

We suspect not. A 2007 report by MMK Consulting for the City of Vancouver found that, on average, residential properties in Vancouver paid $0.56 in property taxes for each dollar of tax-supported services consumed, while non-residential properties paid $2.42 for every dollar of tax-supported services they consumed. While this report is dated, the issue is not. We anticipate a similar study of Greater Victoria municipalities would find similar results.

Further to the matter of the ratio between commercial and residential is the issue of share. If a municipality’s total properties are 70 percent residential and 30 percent non-residential, is the share of municipal taxes paid proportional? We suspect not. We expect the share is adjusted for a variety of reasons, perhaps even so that residential property owners – voters – complaints are minimized.

With municipalities’ primary source of revenue being property taxes, we recognize the temptation. Some excuse the difference between mill rates because businesses just “write off” their property taxes as a business expense, which to some extent is true. The counter argument is that write-offs don’t compensate for the difference created by high ratios.

Property taxes contribute to our overall competitiveness with other jurisdictions and affordability, the latter to which we already have the dubious pleasure of being recently ranked among the world’s least affordable cities to live in the 13th Annual Demographia International Housing Affordability Survey: 2017 Rating for Middle-Income Housing Affordability.

With our region facing serious challenges such as the high cost of living, rising costs - and decreasing inventories - of housing, and inadequate transportation systems, we simply do not need disincentives to do business in Greater Victoria.

Catherine Holt is the CEO of the Greater Victoria Chamber of Commerce. 250-383-7191, CEO@victoriachamber.ca, www.victoriachamber.ca

Published in Jan 27 Times Colonist

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