Let’s consider two mid-sized cities in the Okanagan Valley: Penticton (population 34,935) and Vernon (population 42,199).
Let’s now consider the municipal tax burden split between the residents and the business enterprises in the two cities as determined by the business tax multiplier. For residents, it is set at one and the higher the multiplier for the business group, the more they pay on their assessed property value. City administration sets the multiplier each year at budget time.
Vernon had a 2018 tax multiplier of 2.85 while Penticton had one of 1.66. Taxation records on the B.C. government website indicate the following:
1) The business groups in both cities had the same percentage of the total assessed value for each city at 15.4 per cent for Vernon and 15.7 per cent for Penticton
2) The Vernon business group paid 33 per cent of the overall tax while those in Penticton paid only 20 per cent.
3 Penticton residents paid 75 per cent of the overall tax while Vernon residents paid only 64 per cent.
4) Penticton has the lowest business tax multiplier of virtually all cities in B.C. Therefore, their residents face the highest tax burden.
5) In 2009 Penticton had a tax multiplier of 2.04 (1.66 now). Thus the comparable tax inequity is worse now in Penticton than it was 10 years ago.
The reason given by Penticton city administration for the residents carrying more of the tax burden is that the tax rate for business is kept low to encourage growth. Here we have a much higher business tax rate in Vernon, but considerably higher growth rate there. Kelowna has among the highest growth rates in Canada and had a business tax multiplier of 2.5 in 2018. In other words, the facts don’t validate the reasons given for this policy.
Perhaps someone at city hall could explain the rationale here.
Claude Bergman
Penticton
