The Fair Tax Coalition, in which Shelfspace is a proud member, has again successfully compelled city council to continue lowering business property taxes in 2009. As a result of the hard work by the Coalition, city council agreed to approve another 1% tax shift from non-residential properties to residential properties.
Savings for Vancouver businesses:
- In 2009, there will be a tax reduction of $155 for a business property valued at $783,000
- Vancouver businesses will collectively save $5.52 million this year
- Since 2006, Vancouver business owners have saved $25.5 million in property taxes overall
Retailers have been watching the Commercial Property Tax increase for years. Since 1983, following a Vancouver policy that fixed the percentage of the civic tax load to be paid by business, the value of residential properties has grown faster than the value of business properties. The result had been that municipal service and infrastructure costs have been loaded onto businesses disproportionately to residences.
Commercial properties in Vancouver have been paying 6.2 times what a residential property owner pays for a property of the same value. The situation is the worst in Vancouver, but is a problem in other municipalities as well. For example, the ratio of commercial to residential property taxes in Coquitlam is 4.98:1, and in Burnaby the ratio stands at 3.84:1.
Even where small businesses do not own the premises in which they operate, they bear the burden of property taxes. These taxes are passed through to tenants via lease payments with the idea that these costs will be recovered through higher prices for customers. To the extent that property tax rates in the City of Vancouver exceed those in surrounding communities, businesses in the city are at a competitive disadvantage. They cannot pass on these costs to their customers without creating an incentive for those customers to make their purchases in other municipalities.
Many argue that the distribution is fair as residences use less municipal infrastructure than their commercial counterparts. However in reality, the City sets taxes to collect a given percentage of all civic property taxes from businesses, regardless of the consumption of city services. Furthermore, based on a consumption of services study commissioned by the City, businesses paid $2.07 for every $1 of services they consumed, while residential paid $0.57 for every $1 of services consumed.
In response to our members’ requests and in an effort to address inequities in the property tax system, Shelfspace joined Fair Tax Coalition in order to lobby this issue.
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