In Vancouver, our elected political leaders have openly recognized the historical unfairness and imbalance between residential and business property taxes. Past and current councils have supported a gradual correction with an annual tax shift between property classes. This is smart policy.
At considerable political risk consecutive Councils have taken a principled stand which will clearly benefit all Vancouverites. It’s not a vote getter, but it is about taking the time necessary to understand the foundation of the issue and then making the right decision.
Why would politicians take this difficult stand? Clear thinking politicians know a business is an employer, plain and simple. The policy of the tax shift is all about economic sustainability and the future of employment in Vancouver.
Important facts we all need to remember about Vancouver property taxes:
The ‘shift’ is not a grant or a tax freeze on business taxes.
The shift is an effort to redistribute taxes broadly between property classes. It is a gradual shift of 1% of the total property tax bill paid by all commercial property owners. Let’s keep this in perspective. A 1% shift of the tax burden was $5.68 million in 2010 (COV tax distribution report 4/22/2010). Even with the shift, city budget increases meant that property taxes still went up for most commercial properties.
Property tax is not taxing a business’s profit.
Most business owners are renters! Property tax has absolutely nothing to do with income of the corner grocery, your favourite coffee shop or credit union. Property tax is based on the value of the property owed by a commercial property owner, just like it is for a residential property owner. So a struggling business who rents their location with no profit still pays property tax as if the business was profitable.
Property tax inequity has reached a serious imbalance. Commercial property owners who represent 8% of Vancouver’s property tax base are paying 50% of the property taxes.
For every dollar of city services consumed, businesses pay $2.42 and residential taxpayers pay $.56 . This means residents are receiving city services at almost half their actual cost. (COV 2006 MMK Consumption of Service Report)
Businesses should pay a fair share of property taxes.
Yes, business should pay more than residential property of equal assessed value but over four times more is bad policy and blatantly unfair and inequitable. It’s also not sustainable and sends the signal that Vancouver is not the best place to do business and offer jobs.
Healthy businesses that employ our citizens should not be taken for granted. Vancouver competes for business with every surrounding municipality. With a growing population south of the Fraser and in the Fraser Valley, employers have other location choices. It is common sense that efforts to keep existing employers are easier and more cost effective than attracting new ones.
Economic sustainability is as important as social and environmental sustainability. We can’t have the “greenest city” in the world without a strong economy and growing commercial tax base, which underwrites necessary social programming. This means healthy, vibrant and growing employers who keep jobs in our city close to where we live.
Fundamentally, the tax shift is all about jobs and economic sustainability in the future. We have a growing population and a younger population that needs employment opportunities in our city.