Businesses Pay Almost Triple The Amount Of Property Taxes That Residents Pay
EMILY BOSTON
BRITISH COLUMBIA – According to the Canadian Federation of Independent Business’ (CFIB’s) latest BC 2024 Property Tax Report, BC businesses continue to pay a disproportionate amount of property taxes, despite improvements in recent years.
The report measures property tax fairness in BC’s 20 largest municipalities by using two indicators. The tax rate ratio is defined as the difference between the tax rate paid by businesses and residents while the tax fairness ratio is defined as the difference between the share of property taxes paid by businesses and their share of property assessment.
“Small businesses are struggling to make ends meet and can’t keep up with skyrocketing property tax increases. BC businesses are already contributing more than their fair share, and this expectation is unsustainable,” said Emily Boston, policy analyst for British Columbia. “Small businesses are not asking for special treatment but a path to property tax fairness.”
Over three quarters (82%) of BC small businesses have seen property tax increases in the last year. This is happening at a time when business owners are already struggling with inflation, high interest rates, and changing consumer demand. Therefore, CFIB recommends limiting growth in real municipal operating spending to no more than the rate of population growth and finding internal cost savings to curb large tax increases. Additionally, CFIB recommends a property tax shift that will reduce unfairness and deliver significant savings to small businesses.
“While property taxes are an important source of revenue for local government, municipalities need to ensure they don’t prevent business owners from doing their jobs,” said Jairo Yunis, Economist for Western Canada. “Small businesses are responsible for most private sector employment so their survival should be a top priority for policymakers.”
Key findings from the report include:
- On average, commercial properties pay 28% of property tax revenue despite only making up 13% of total assessment values.
- Property taxes are expected to grow at a faster rate than municipal spending in BC’s four largest cities (Vancouver, Surrey, Burnaby & Richmond), suggesting a growing reliance on the already unfair property tax distribution.
- Property taxes disproportionately impact business owners with even a 3% property tax increase costing the typical commercial property $670 compared to $68 for the typical residence in the four largest cities.
- Delta (1.52), Chilliwack (1.59) and Richmond (1.64) had the best tax fairness ratios while Coquitlam (2.69), Nanaimo (2.74) and Saanich (3.93) had the worst.
- BC businesses pay, on average, a property tax rate almost three times higher than the residential tax rate.
- A 0.5% tax shift over four years (2% total) would save the average commercial property $3,903 in BC’s four largest cities.
Read the report here.
