What’s (Left) In Your Wallet?

– Catherine Holt is the CEO of the Greater Victoria Chamber of Commerce. 250.383.7191, CEO@victoriachamber.ca, www.victoriachamber.ca.

GREATER VICTORIA – Gasps were heard across Greater Victoria in January as property assessment notices landed and thoughts of, “My property is worth how much?”, gave way to, “What does this mean for my property taxes?”

The good news is that a rise in your property value does not – necessarily – mean you will be paying more in your property taxes. But the bad news is it may. So let’s open a dialogue about property taxes.

Each year municipalities decide how much money they need to bring in, and then set their property tax rates accordingly. Property taxes also include levies collected on behalf of different authorities, e.g. BC Government (school districts), Capital Regional District, Capital Regional Hospital District, BC Transit, and Municipal Finance Authority.

The combined rate of all levies to be collected is often called a mill rate. In Greater Victoria, mill rates are based on $1,000 of taxable value and vary by class of property, such as: residential, industry, commercial/business, utilities, supportive housing, farming, non-profit, and recreational.

One of our concerns is the difference – or ratio – between property taxes. In the City of Victoria municipality, for example, the 2016 mill rates were 6.8297 for residential and 21.4646 for commercial, for a ratio of 1 to 3.1.

That means in 2016 an average City of Victoria resident would have paid $3,737 in property taxes (before any grants) on a residence valued at $547,200, while a business would have paid $11,745 on a commercial property of the same value.

The rationale for this ratio is unclear, raising the question, does a non-residential property owner consume more than two times the tax-supported services of a residential?

We suspect not. A 2007 report by MMK Consulting for the City of Vancouver found that, on average, residential properties in Vancouver paid $0.56 in property taxes for each dollar of tax-supported services consumed, while non-residential properties paid $2.42 for every dollar of tax-supported services they consumed. While this report is dated, the issue is not. We anticipate a similar study of Greater Victoria municipalities would find the same results.

Businesses need to understand what drains their bank accounts. Commercial property taxes affect a business’ competitiveness and profit margins. With our region facing serious challenges such as the rising costs – and decreasing inventories – of housing and inadequate transportation systems, we simply do not need any more disincentives to do business in Greater Victoria.

As the voice of Greater Victoria businesses, The Chamber is asking all 13 of Greater Victoria municipalities to outline their intentions for their 2017 mill rates. We will watch ratios carefully, and intend to be quite vocal – locally and provincially – if we see increases. We hope this effort will enable a common understanding and informed dialogue, contributing to sustainable, fair, and transparent property taxes.