City council has decided to lower taxes for Canoe Forest Products, the only company in the city’s ‘major industry’ class.
The decision came during the Feb. 24 council meeting, when tax talk was a key part of the agenda. One topic was the effect of shifting tax collection away from major industry.
Coun. Kevin Flynn outlined the difference between property classes such as residential and business.
He said what he hears talked about a lot in the business community is the class multiple. He gave the example of a house worth $500,000 and a commercial property worth $500,000. The business would pay 2.8 times more tax in Salmon Arm than a residence would. The residential rate is considered the base rate.
Flynn said the common reasoning is that businesses can write off the tax or businesses use more services so should pay more. He thinks 2.8 is a “defensible” multiplier.
However, the multiplier for the major industry class is the one rate that’s not fair, Flynn said, because major industry pays 18.5 times what residential pays.
He made a motion that $50,000 of taxes from major industry, i.e. Canoe Forest Products, be shifted to residential.
The impact would be an additional $6.50 for a house assessed at $400,000.
It would also mean the 2020 city tax bill for Canoe Forest Products would be $523,000 instead of $573,000.
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“They have come to us on numerous occasions to say, especially in today’s climate for the forest industry, it’s not fair…,” Flynn said, explaining he doesn’t like to see a significant reliance on one business, especially in today’s forest economy.
He said he grew up in Campbell River and when the mill there shut down, the community took a five-to-10 million dollar tax hit. He emphasized he’s not saying Canoe Forest Products is at risk of shutting down; what he’s saying is the company employs 300-plus people who then have homes in the community. He said the company brings significant value to Salmon Arm and has asked on a number of occasions to have the major industry tax multiplier reduced.
In 2016, council reduced the company’s tax bill by $25,000.
Flynn said he doesn’t want the tax shifted to both residential and business classes, because small business is the life blood of the community. By shifting it only to residential, the largest class, each homeowner pays a small increase.
Mayor Alan Harrison added that the general manager told him the business is willing to pay its fair share, but the share has been higher than fair. Harrison also said it’s not because the business is in difficulty.
After much discussion, all but one member of council present voted in favour of the tax shift. Coun. Tim Lavery opposed the motion, stating he supports the status quo for this year. Coun. Chad Eliason was absent.
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