TAX PARITY From Sooke to Sidney, we love our local shops and services. We take pride in the labours of our home-grown artisans and craftspeople. We celebrate the successes of family-run businesses and our local start-ups. We live in a beautiful, vibrant community where the 100-mile diet is effortless—and delicious. So the next time you visit your local storefront, regardless whether it is for a coffee, window-shopping or for some professional advice, ask yourself why this business is paying substantially more than you as a resident for municipal administration and service, e.g. fire and police protection, libraries, roads, sewer and water, etc. These local businesses have to pass the cost of taxes they pay on to their clients and customers—you. These taxes therefore contribute to your high
PROPERTY TAXES EXPLAINED Each year municipalities decide how much money they need to bring in, and then set their property tax rates accordingly. The rate of all levies to be collected is often called a mill rate, and is approved as a by-law each year. In Greater Victoria, property tax rates are based on $1,000 of taxable value and vary by class of property: Residential, Industry, Business, Utilities, Supportive Housing, Farming, Non-Profit, and Recreational. Property taxes include levies collected on behalf of different authorities, e.g. School Districts, Capital Regional District, Capital Regional Hospital District, BC Transit, and Municipal Finance Authority. Approximately half of your property tax bill is for municipal taxes. For example, a property in the Business Class valued at $750,000 in a municipality with a total mill rate of 19.2894 (2016 Greater Victoria average) would pay $14,467, which would include $7,611 in municipal taxes. A residential property in the same municipality but with a residential rate of 6.2505 (2016 Greater Victoria average) would pay $4,688, which would include $2,486 for municipal taxes. cost of living in Greater Victoria. Although your July property tax bill includes municipal taxes plus other levies on behalf of other authorities (see above), this article will concentrate on the municipal portion only. RATIONALE B.C. municipalities typically charge properties in Business Class1 a multiple over Residential. In Greater Victoria, that ranges from a multiple of two to a multiple of six.
Earlier this year, we sent a formal letter to each of Greater Victoria's 13 municipalities to ask why businesses are expected to pay more for the same services. Seven responded to our letter dated January 17, 2017, each acknowledging the practice of charging a multiple, which is a ratio of the difference bewen the classes. One municipality has a higher Business rate in comparison to others in the region because it wants to maintain a very low Residential rate. Another has a policy of not linking its Business rate with Residential, instead working to ensure its Business rate was lower than surrounding municipalities. Most pointed out the lack of control they have over the overall “tax bill” due to levies from other authorities. But not one explained why a business owner pays more than a homeowner for the same municipal services. Certainly, expecting businesses to pay more than residents is not tied to higher consumption. The 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 would find the same results. FAIRNESS In the same letter sent to the 13 municipalities referenced above, The Chamber urged Councils “… to do all they could 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 do not increase.” 1 Business is primarily made up of commercial property like office and retail space.
BUSINESSMATTERS | JULY 2017