According to a Canadian Federation of Independent Business (CFIB) study the average property tax gap between small businesses and residents for the same value property continues to rise in British Columbia.
Brian Bonney, CFIB director of provincial affairs said, “Small businesses are unfairly burdened with paying almost three times the property taxes than residents. This can’t continue indefinitely. We urge municipalities to ‘Cap the Gap’ and set incremental targets to achieve a two to one ratio over the next few years.”
The research report, titled ‘Property Tax Fairness in British Columbia’ analyses the ratio between business (class six) and residential (class one) property tax rates in municipalities across the province during 2008.
According to the report, in 2003 the average property tax gap of the municipal portion of property taxes was 2.42 to one.
In 2008, that gap climbed to 2.97 to one whereby businesses paid more municipal property taxes than residents on the same valued property in 157 of 160 B.C. municipalities, including the Village of Burns Lake.
“The gap cannot continue to grow. Small independent businesses are by their very nature, the foundation of their communities. They provide the stability and certainty our economy needs in today’s turbulent times. It is unwise and irresponsible to keep saddling them with an unfair portion of municipal costs,” added Heather Tilley, CFIB policy analyst.
The CFIB also say that while businesses are forced to pay top dollar for their property taxes they don’t recieve any more value in the services they receive from municipalities.
The report shows that local businesses only use 24 per cent of municipal services while paying the bulk of the costs.
“In many B.C. communities residents are being heavily subsidized by local businesses. When you see a huge tax gap it suggests that municipal councils don’t believe residents are willing to pay the full cost for all the services they receive. If that’s the case, there is only one solution, municipalities should trim their spending and ‘cap the gap’,” Tilley said.
According to Village of Burns Lake chief administrative officer Sheryl Worthing based on an assessment value of $100,000 for both residential and local businesses the 2011 general [residential] tax rate is 7.2245 per cent which equates to a total of $722.45, while the 2011 municipal business class rate is set at 16.1580 per cent, adding up to a total of $1,615.80.
“Business tax rates are typically higher than residential tax rates,” Worthing said.
She explained that the Village of Burns Lake does follow provincial standards and is in line with other municipal tax rates.
“Council follows the guidelines of its finance policy,” she said. According to Worthing the Village of Burns Lake finance policy states: annually, before approving the annual tax rates, council will consider the amount of tax revenue required in relation to other sources of revenue in funding the cost of ongoing and new village services.
Tax ratios between classes will be reviewed with consideration given to changes in the assessment base as a whole, as well as changes to the components that make up the base.
“The ratio between business class and residential class for 2011 will be 2.24 which has decreased from 2.49 in 2000,” she added.
