Council votes to protect businesses by shifting burden to residences
Frances Bula
Sun
Vancouver homeowners are being hit with an 8% tax hike. Bill Keay/Vancouver Sun
City of Vancouver homeowners will pay all of the tax increase for the city this year, after a precedent-setting shift of taxes away from business.
That means the average tax increase for homeowners will double to eight per cent from four per cent, while the overall business tax contribution will essentially be frozen.
This is the first time in the city’s history that taxes have shifted so dramatically.
Opposition councillors argued that the decision should have been deferred for two weeks to allow council to fully understand all the impacts of the move and to hear from the public.
“I’ve got some major concerns that this process is flawed,” said Vision Vancouver Coun. Raymond Louie. His colleague, Tim Stevenson, pointed out: “This is a huge increase. This is going to be a tremendous hit.”
But ruling Non-Partisan Association councillors said the public has known for a long time that council was considering a tax shift and that it was time to show leadership in order to protect the city’s small businesses.
The shift will mean that the overall tax contribution from business will remain frozen at 2006 levels, even though individual business taxes may drop, stay the same or even rise.
“This would certainly take us boldly where no council has gone before,” said Coun. Suzanne Anton
She and fellow Coun. Peter Ladner both acknowledged the move, which will see homeowners now paying 47 per cent of the city’s total tax bill instead of 45 per cent, is going to be a tough political sell to voters.
Some higher value properties — with assessed values that have increased more than the 24-per-cent average since last year — will take a significant tax hit.
One sample calculation done by the city’s finance director showed that a house near 43rd Avenue and Vine Street with an assessed value that increased to $3.7 million in 2007 from $2.9 million in 2006 would end up with a tax bill of $7,666. That’s $791 higher — or 11-per-cent more — than the previous year. About $310 of that would be due to the business tax freeze.
But NPA councillors noted that the owner of the average $740,000 house in Vancouver will only pay an additional $5.25 a month because of the freeze, which they believe Vancouver taxpayers are willing to accept.
“People get it. They want to protect their neighbourhoods,” said NPA Coun. Kim Capri.
NPA councillors lean heavily on the argument that the tax freeze will help support neighbourhood businesses, although it will actually benefit all businesses in Vancouver because the city is not able to set different tax rates for small and large businesses.
As well, the freeze will have wildly differing effects, depending on whether a building is in a hot commercial zone that rose in value or not.
Sample calculations showed a retail business at 18th Avenue and Dunbar Street will pay almost $3,000 less in taxes under the freeze.
One at Broadway and Laurel Street will see an increase of $8,000, instead of $17,000, and a major office building in the downtown business district will see its taxes drop by $113,000 instead of the $61,000 drop it would have seen with no freeze.
The final report on the tax shift was available to the public about 36 hours before council meeting Thursday. Only six persons came to council to speak to it, all business people supporting a tax freeze for businesses.
Several councillors noted that they were already starting to get dismayed and angry e-mails.
Business groups were thrilled with the decision, however, which they have been lobbying for intensely over the past two years.
“The City of Vancouver is currently engaged in the largest commercial property tax revolt in the history of Canada,” said Fair Tax Coalition member Paul Sullivan, as he urged councillors to vote for the freeze. “This is a very nominal cost for residents to accept.”
However, some residents are already expressing some dissatisfaction.
Laura Quilici, who lives in a Strathcona townhouse with her artist husband, said the tax increase is difficult to take for a family like hers.
“We have a daughter who’s three and our daycare rates have gone up too.”
But she’s mainly upset by the process, which she feels was sprung on taxpayers.
“I don’t remember them talking about doing this. I just remember their election promise was to keep taxes low. If you know things like this are coming, you can mobilize to protest it or you can at least plan for it.”
But, she said, she had no idea the council was planning anything like this.
TAX TIME
Vancouver homeowners are being hit with an 8% tax hike.
AVERAGE HOME PRICE $750,000
AVERAGE ANNUAL TAXES 2006
$1,449
AVERAGE ANNUAL TAXES 2007
$1,575
An increase of 8%
© The Vancouver Sun 2007