Kimberley City Council is now deep in budget deliberations, and at a special meeting this week, the issue of Kimberley’s flat tax was discussed again. In the end, Council voted to continue its gradual reduction of the flat tax with another reduction of $80 in the coming year.
The flat tax, first created in the early 1990s, was created with the premise that every home uses the same basic level of services regardless of assessed value. It sheltered higher value homes from the full impact of variable rate taxes when the disparity in assessed values from high to low was significant. The tax was cancelled but grandfathered a few years later. It is used by only five municipalities in British Columbia. With the exception of Kimberley, the municipalities currently utilizing a flat tax collect a significant portion of their tax revenue from major industry and/or business class assessment.
When first implemented in 1990, the flat tax was $400 on improved residential properties and $100 on unimproved properties. It then rose to $786 for improved properties by 2015, and $310 for unimproved. That was when Council began the process of reducing it by $80 per year, although they did not reduce it in 2019. It now sits at $466 for improved properties, and $400 for unimproved.
Council has always been split on the issue, with two long serving councillors, Darryl Oakley and Kent Goodwin, wanting it done away with, and Mayor Don McCormick against lowering it.
READ: Time to end flat tax, Coun. Goodwin says
The criticisms of the flat tax are that it is recognized as inherently vertically inequitable. It creates the perception that owners of lower value homes subsidize the property taxes of higher value homes.
The average assessed price of a home in Kimberley is $323,000. The reduction in flat tax means homes worth less than the average would pay less. A home with a value of $100,000 would therefore pay $304 less annually, while an $800,000 home would pay $824 more.
Count. Darryl Oakley says the flat tax is regressive and he would like to see it removed entirely.
“I support it being completely removed,” he said. “I feel people should pay tax on the value of their homes.”
Coun. Jason McBain said he agreed with Oakley in principle, but he pointed out that a significant portion of lower value homes in Kimberley, such as some of the older condos on the ski hill, are used as second, or vacation homes, and many are owned by numbered companies.
Mayor Don McCormick argued that Kimberley has been working hard at keeping the variable tax rate down to a 2 per cent per year increase. Doing away with the flat tax, he said, would really only benefit a small number of people.
“We are sitting right now at eighth in the province in terms of property taxes, including the flat tax. I’m not anxious to get to the top of that list.”
McCormick said he did not support an $80 reduction this year.
Coun. Goodwin countered that he thinks it is ethical for higher valued properties to pay more. He said new homes are the higher value properties and since council of the day began reducing the flat tax in 2016, there have been about 200 new dwellings built, which means more revenue.
“We should continue our measured process of reduction,” he said.
“We’ve been going at this for six years, and we have the same conversation every time,” said Coun. Sandra Roberts. “The logical compromise is to continue the way we are doing it slowly. I’m comfortable carrying on the process we’ve been using.”
Goodwin added that he would be comfortable stopping the process when the flat tax was down to $80. If you let it go to zero, you lose the ability to levy the tax entirely, and although he said he couldn’t see what circumstance would ever arise that it would be needed again, he wouldn’t want to lose it altogether.
In the end, Council voted to reduce the flat tax by a further $80 next year, with councillors Kyle Dalum, Jason McBain and Mayor McCormick opposing.
The unimproved property tax will go down $14 to $386.
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