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The Vancouver office of the Canadian Federation of Independent Business agrees that the interim tax measure that Municipal Affairs Minister Selina Robinson, seen here on Nov. 17, 2017, introduced is so flawed it’s not worth attempting.

DARRYL DYCK/The Canadian Press

None of the nine cities that pleaded with the B.C. government to provide tax relief for small businesses will be using the interim measure introduced by the province last week, say several Lower Mainland mayors.

They say it’s both impossibly cumbersome and likely to increase taxes for some businesses instead of helping them.

“It’s not that we’re not going to do it. It’s that we just can’t,” said Coquitlam Mayor Richard Stewart, one of the mayors who will be signing a joint letter to the province that outlines their position. “We have some small businesses that are really hurting, and I would do anything to help them, but this is really, really unworkable.”

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And the group representing small businesses in B.C. supports that stand. The Vancouver office of the Canadian Federation of Independent Business agrees that the interim tax measure that Municipal Affairs Minister Selina Robinson introduced in the legislature last week is so flawed it’s not worth attempting.

“You just can’t do it,” the CFIB’s Muriel Protzer said.

There’s been a big push by cities for several years to provide some kind of relief for small businesses. Skyrocketing land values in certain commercial districts – the result of speculative buying or rezoning allowing greater density – have pushed assessments and tax bills up.

Almost all business owners who rent are required to pay the taxes for the building they occupy – what’s known as a triple-net lease.

The way the property-tax system works now, commercial properties are assessed based on sales of nearby properties with similar characteristics. That means a one-storey dress shop with development potential could end up with the same valuation as a 20-storey condo with retail along the bottom.

To add to the burden, the taxes for the dress shop and its future development are calculated at the business rate, which is almost four times the residential rate, even though its future development would for the most part be zoned residential.

Cities had asked the province to come up with a split-assessment tool that would be applied through the provincial land-valuation agency, the BC Assessment Authority. That would tell city financial departments how much of the property value was based on development potential, as opposed to current use. The development-potential part of the land could then be taxed differently – still classified as a business but with a lower tax rate.

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The new law Ms. Robinson introduced puts cities in the hot seat. It gives them the power to exempt certain businesses from a portion of their taxes, as long as the cities define which ones – those that have experienced significant tax increases over a certain level in a certain time period, for example.

It only applies to small businesses leasing their premises, not to operators who also own their properties.

But mayors throughout the Lower Mainland say that is not the solution they asked for – that it could harm some businesses if, for instance, large tenants in a mall or complex had their taxes lowered and the assessments of others had to be raised to compensate.

They also say they can’t possibly implement the new exemption in time for this tax season.

Richmond Mayor Malcolm Brodie noted that his city got a similar kind of temporary exemption for properties around the Canada Line, as it was being planned and built, which were then rezoned to higher densities.

“It took us many, many months to use that legislation, and it was very, very complicated, detailed work,” he said.

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In fact, it took the city from March to October to run the numbers on all the properties affected – just 37, although some were large malls with many small businesses in them – and figure out what the rules would be. The city also needed to verify which of the dozens of businesses had operators with triple-net leases. Then the tax exemptions didn’t go into effect until the following year.

In the new legislation, cities would have until April 22 to come up with a bylaw.

Vancouver Mayor Kennedy Stewart reiterated late last week that he didn’t see how Vancouver could possibly do all the work necessary to implement it.

City of North Vancouver Mayor Linda Buchanan said the same, while West Vancouver Councillor Craig Cameron said there was no way his city would even attempt it.

“We aren’t interested at all,” he said. "How do we pick winners and losers in a cogent fashion? And don’t we end up subsidizing landowners indirectly? It’s not a functional tool.”

We have a weekly Western Canada newsletter written by our B.C. and Alberta bureau chiefs, providing a comprehensive package of the news you need to know about the region and its place in the issues facing Canada. Sign up today.

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