‘We are paying for all the services we consume plus half of the residential,’ businessman complains
Frances Bula
Sun
Vancouver residents only pay 56 cents for every dollar in services they get, while businesses pay $2.42 for the equivalent.
That’s the conclusion of a new study done for the city, examining whether it needs to alter its tax system to lighten the tax load for the city’s commercial properties.
There is no recommendation yet on how that will be accomplished.
But the report, done by MMK Consultants, paves the way for a case to be made that Vancouver residents have been getting a bargain ride.
And a business group that has been lobbying for a tax-rate reduction said the report proves its case that there has to be a change.
“The commercial class is really subsidizing the residential class in this city,” says Ed DesRoches, the owner of Plum Clothing store and a member of the Fair Tax Coalition. “We are paying for all the services we consume plus half of the residential services.”
The city has appointed a property-tax commission to come up with a system for “fair” taxes. In the past, the city has shifted the over-all proportion of taxes paid by business to residential.
DesRoches said his group isn’t committed to any one solution, but hopes the report’s analysis of who uses which services will help the commission find a mechanism.
“There are ways of more fairly allocating,” said DesRoches. “Maybe residents should pay more for their parks. We know it’s politically charged, but someone’s got to make some tough decisions.”
Besides getting homeowners and visitors to pay more, another solution is to reduce the cost of city hall over-all.
“You have to question some of the things we’re spending money on,” he said.
In 1984, the city was given the right by the province to decide which class of properties would pay which share of taxes. At that point, council decided residential taxpayers would cover 40 per cent of the bill, while businesses would cover 60 per cent and tax rates were set accordingly.
At that point, the business tax rate was about three and a half times the homeowner rate.
But as the number of residences rose and the number of businesses shrank, the proportion didn’t change for years, with the result that the business tax rate is now six times the homeowner tax rate.
The report notes that the value of Vancouver residential properties has risen from 67 per cent of the total land value in 1984 to 83 per cent currently, as a condo boom has added thousands of new units to the city.
City councils over the past 10 years have shifted some of the tax burden, so that residents now cover 45 per cent of the taxes.
The MMK report said the city’s homeowners used 76 per cent, or $388 million, of the city’s tax-supported services in 2006, but they only paid $217 million. Businesses used only $111 million in services, but they paid $292 million.
© The Vancouver Sun 2007
