Trade Associations Propose Solutions to Property Tax Squeeze Small Business – Saanich News
The government needs to change property tax policies that let small businesses bear a disproportionate share of the tax base, according to a group of BC business associations.
The Business Tax Alliance, which includes business associations representing downtown Victoria and 14 Lower Mainland jurisdictions, formed late last year.
He says the province’s practice of assessing property values based on redevelopment potential and the value of surrounding properties has created a status quo far beyond the means of small business owners in the largest municipalities in the city. British Columbia,” Alliance spokesman Paul Sullivan said.
In the Capital Regional District, commercial property tax is three times higher on average than industrial or residential, said Bev Highton, owner of property brokerage NAI Commercial in Victoria.
Highton cited a heritage building in downtown Victoria valued by BC Assessment at $2.6 million in 2019. Its value soared 31% to $3.4 million the following year, and 27 additional % to reach $4.1 million in 2021.
The 2020 sale of a neighboring property for a new 15-story building was a factor in the massive upside.
According to Jeff Bray, executive director of the Downtown Victoria Business Association, this practice of BC Assessment affects more than the owner.
“What happens is the landlord has to pass that cost on to the tenant,” he said. “It can really impact a business, especially during the pandemic when revenues are down to begin with.”
He mentioned a parking lot in downtown Victoria whose rating went up 100% in one year. “It forces you to charge $20 an hour for parking or rearranging whether you like it or not,” Bray said.
One of the two solutions offered by Tax Alliance uses a strategy used by Sullivan in court when he owned a business and a commercial building in Vancouver. By arguing to split his property’s tax class as commercial for the building itself and residential for the undeveloped airspace above, he was able to cut his tax bill by 75%, he said. he declares.
“It only works in certain areas, but it provided the model for this approach. We won it in court. Surely we can win it in politics,” he said.
The other solution may seem more drastic, but Sullivan, Highton and Bray say it is more feasible: give business licensees a single electoral vote in the municipalities where they are registered.
Highton, a 54-year-old estate agent from Victoria, said commercial tenants are “fully aware” of the effect property tax has on their expenses, including rent. As such, small business owners are very interested in the financial aspects of city governance, Highton said.
In Vancouver, commercial buildings account for 45% of property taxes paid, despite only accounting for 7% of properties in the city. Commercial properties in Victoria accounted for the same percentage of the city’s property tax collection; $67 million out of $147 million raised.
“Huge contributors should at least have a vote,” Highton said.
The move would add about 523,000 municipal voters to B.C.’s three million, Sullivan noted. Several municipalities already allow eligible non-resident owners to vote.
Although it could take up to two years, Bray said changing B.C.’s assessment law to allow for the first solution is “very doable.”
“If a city needs to raise $100, they will raise $100 – the problem is who makes up that $100?” He asked. “All those little mommies and pops. Many of them simply cannot afford it.
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