BRITISH COLUMBIA— As Toronto city council prepares to approve a property tax reduction to help their struggling businesses, Ryan ULC and many BC Business Improvement Associations (BIAs) have created a new Business Tax Alliance (BTA) calling for their own solution.
This alliance represents over 10,000 commercial taxpayers, from Victoria, Vancouver and Surrey, focused on solving the enduring small business tax problem of well over a decade.
“All levels of government have either played hot potato with the issue or are proposing outcomes that conflict with the market and are divisive in nature,” says spokesperson and technical expert Paul Sullivan. “We’ve seen a great deal of political rhetoric about helping small business, but no results. As governments continue pointing fingers at each other and passing the buck, unsustainable taxes push your favourite pubs and stores to the brink of bankruptcy, closure or relocation.”
The BTA has two goals:
1) A fair solution for small business taxation on properties valued as redevelopment
2) Return of the commercial vote in municipal elections
A recent international tax competitiveness report found Canada ranked 24th (out of 37 OECD countries) for property tax competitiveness.
“We’re clearly lagging behind,” noted Neil Wyles, executive director of the Mount Pleasant BIA. “Our BC provincial and local governments were quick to introduce about 19 new taxes, including Speculation and Vacancy Tax (SVT), Additional School Tax (AST) and the Empty Homes Tax (EHT), but very slow to offer any relief in cities where rising land values and redevelopment potential (airspace above their shops), is taxed as high as 3.4 times the residential rate.”
Municipal Business Vote
Meanwhile, to prevent further property taxation without representation, the Alliance is also calling for a return to the municipal business vote in civic elections. That voting right was stripped from business in 1993 by a previous NDP government amidst unfounded fears by one cabinet minister that businesses would merely open a storage locker to gain a vote in that municipality. Subsequent provincial governments (BC Liberals) failed to re-establish this vote despite various lobby efforts by chambers and others.
Merchant Tax Increases throughout BC
Many longstanding retailers, restaurants and shops such as the: Dover Inn, and Chocolate Mousse Kitchenware that faced as high as a 93 per cent annual property tax increase, have simply given up and closed or relocated. This restaurant owner just got a “45 per cent tax increase“ after reopening for indoor dining. Similarly, other BC cities, like Victoria, Surrey and Kelowna are seeing substantial tax hikes. West Kelowna properties see a tax hike of more than 23% over the next four years. Commercial property tax increases in Sidney are as much as 28%.
Options For Small Business Tax Relief
The BTA is open to discussing any reasonable approach to solving the over-taxation of our community retail properties, says Sullivan. “We are extremely concerned that the Provincial government is considering Commercial Rent Control and meddling with the triple net lease global standard (where business tenants pay the monthly lease, property taxes and maintenance costs),” Sullivan says. “The issue is not that tenants are expected to pay the taxes on the property, a global norm. Rather, we are placing too high a burden of taxation on this type of property.” These properties are typically one-storey community retail premises, consuming very little in the way of municipal services, he explained. “Provincial and civic governments have been windfalling tax revenues off these properties far too long. It’s time for them to ‘give a little back’. Government intervention into the markets fail every time. Just look at how well the demand measures (taxes) have worked on housing prices,” he points out.
The BTA is advancing several solutions including the following:
- Properties taxed at “highest, best use” (HBU) receive a 50% break on their school tax share of their taxes, given Vancouver school taxpayers already subsidize the rest of BC.
- HBU properties are placed in class 10 (new class) with a 25% lower tax rate than class 6. (Any tax revenue shortfall would be covered by all taxpayers.)
- Split Class – place a residential tax rate on the vacant air space above shops, and no longer charge SVT or AST on the residential assessment (class as you value).
- In all proposed solutions above, a property must have an active business license to qualify for a tax reduction.
Sullivan urges any other impacted businesses to sign on to this tax appeal and municipal vote campaign via this landing page.
