Abbotsford News
Friday, May 20, 2016
A45
myBusiness E N G AG I N G C O N S U M E R S • B U I L D I N G C O M M U N I T Y
w w w . a b b o t s f o r d c h a m b e r . c o m Monthly publication brought to you courtesy of our Media Partner:
Does business pay more to receive less? During the 2016 Municipal budget development process, Abbotsford City Council directed staff to identify options for reducing the tax burden on business properties (tax class 6). In 2016, businesses will pay municipal property tax at a multiple of 2.32 times that of residential property owners. This means that on an equivalent property valued at say, $500,000, a business owner would pay over twice the tax!
for newer and start-up businesses. If a property has vacant stores or offices, the taxes must still be paid. While it is argued that businesses do have the ability to deduct this expense there must still be income to cover the expense. In addition, the sale of the business is subject to capital gains taxation while the sale of a residential property is not. In B.C., the small business sector has established itself as an integral instrument of job creation and economic growth. It is the primary provider of private sector jobs in the province, reflecting an important and ongoing trend toward economic diversification. The small business sector is also a key source of innovation.
In a recent report to Council, city staff identified two scenarios that would reduce the ratio to 2.0 times the residential rate over either one or two years. Council deferred these recommendations to the 2017 budget discussions.
In 2014, B.C. was home to a total of 390,300 businesses, of which 98 per cent (382,600) were classified as small businesses. The majority of small businesses in B.C. are micro-businesses with fewer than five employees. In 2014, about 309,300 businesses fit this description, comprising approximately four out of five of all small businesses. Of these, almost two-thirds were self-employed persons without paid help.
The Chamber of Commerce continues to raise the question, “Does the burden on municipal resources and use of service from business justify significantly higher rates than residential property tax?”. Municipal governments’ provide essential services in their community and these are primarily funded through property taxes. It is clear that fairness would begin with each taxpayer carrying the costs of the services they use. Their share of the cost of indirect services (amenities, infrastructure and maintenance, for example) is more subjective, as the benefits are indirect.
These are not the one per centers! These are the folks who are your plumber, your mechanic, your florist, your printer. They provide your dining, your entertainment, your professional services and trades as well as commercial goods and services. In 2014, approximately 1,010,800 jobs in B.C. were derived from small business, accounting for 44 per cent of total employment in the province. As a matter of fact, small business accounted for nearly a third (just under 32 per cent) of wages paid to workers, well above the Canadian average of just over 26 per cent. It is these jobs that provide economic strength to our City.
The first cornerstone of the City’s 2015-2018 Strategic Plan is a Vibrant Economy, wherein it states “we (the City) focus on developing a vibrant and diverse economic environment”. It further states that “we value and support our existing businesses and ensure we are structured internally to support a vibrant and thriving economy”. The demand placed on municipal services by the business sector is far less than that of the residential population base. In many cases, such as solid waste collection, business bears the cost of this service over and above their property taxes. When the City added recycling and food waste requirements to the business sector, this was a further additional cost that businesses were required to take on. The substantiation of the multiplier cannot be made simply on the basis of a perceived “ability to pay”. A municipality’s residents control aspects of tax fairness and
affordability through the democratic process, they elect the Mayor and Council who control the rates. A fundamental tenet is “no taxation without representation”. Yet business property owners do not have a vote and do not share this same opportunity. Businesses pay property taxes directly or as part of their rent or lease. These taxes are part of overhead that must be paid regardless of revenue or profit. This can prove a barrier
Council needs to clearly demonstrate that Abbotsford is a community where “we value and support our existing businesses and ensure we are structured internally to support a vibrant and thriving economy”. Last fall, the BC Small Business Roundtable recognized Abbotsford with its Open for Business Award for their innovative programs and projects that support local businesses. Reducing the business tax ratio in Abbotsford to 2.0 will send a strong message to the business community that the City recognizes the contribution made by existing small business to the community and is a competitive leader in attracting new business.
Individual Solutions from Independent Advisors What we offer our valued clients:
Todd Chretien
Linda Spletzer
Bote Miedema, CFP
604-851-4299
604-851-4294
604-851-4295
Financial Advisor
todd.chretien@raymondjames.ca
Financial Advisor
linda.spletzer@raymondjames.ca
Investments
Account Types
Financial Planning
GICs, Bonds & T-Bills
RRSPs, RRIFs, RESPs*, TFSAs Retirement planning
Stocks
Cash accounts
Education planning
Mutual Funds
Margin accounts
Estate planning
Corporate accounts
Life, disability & health Insurance
Financial Advisor
bote.miedema@raymondjames.ca
Securities offered through Raymond James Ltd., member of Canadian Investor Protection Fund. Insurance Services offered through Raymond James Financial Planning Ltd., not a member of Canadian Investor Protection Fund.
®