Vancouver homeowners will find out Monday whether their property tax bills will go even higher this year, with councillors set to debate a last-minute change that would shift some of the city’s tax burden away from businesses and onto residences.
Although staff and the mayor are opposed to the shift, some councillors from the two biggest parties say the city needs to send a signal to its struggling businesses that have been hit hard by Vancouver’s soaring real estate values.
There’s concern in many neighbourhoods about small businesses that have been forced to close because they are being hit with tens of thousands of dollars in tax increases, partly a consequence of the way Vancouver’s real estate values have been warped by speculation and partly the way its tax system works.
As it stands, most business owners who lease space pay a share of the property tax bill, which can skyrocket if that land is rezoned – even if nothing new is built on it for decades.
“This isn’t going to solve everything for small businesses, but it will showcase to them that this is our first move in looking at our city economy,” said Green Party Councillor Michael Wiebe, who himself runs a small restaurant lounge near Main Street.
The Non-Partisan Association’s Sarah Kirby-Yung also said the city’s small businesses deserve some sign of relief immediately.
“I see far more pros than I see cons in supporting this. This is one tool the city has,” she said.
The Green and NPA parties have eight of the 11 council seats and together could form a majority if they vote the same way.
The council had already supported a 4.5-per-cent tax increase to support the city’s $1.5-billion budget in December.
But there was enough concern from councillors about the tax load for businesses as the budget was approved that they passed a motion to study shifting the ratio of taxes paid by businesses and residences.
As it stands now, the city’s 192,000 homeowners are slated to pay 55 per cent of the $790-million the city is raising for its budget through taxes, while its 14,500 businesses are pegged for 45 per cent.
That split would change to 57-43, with $16-million moving from businesses to residences, if the shift is approved Monday.
For people whose homes are assessed at more than $3-million and are therefore subject to the province’s recently introduced school tax, that could mean their tax increase goes as high as 32.7 per cent. Staff noted that new provincial tax is taking $100-million in residential taxes out of the city.
The association representing landlords said the shift would hit their sector hard because apartments are classified as residential.
“This is going to have a huge impact,” said David Hutniak, CEO Of LandlordBC.
But city business groups are pleading for the shift, saying it will only cost homeowners $80 a year and condo owners an average of $40, and noting the city is adding many more new homeowners each year than businesses.
From 2012 to 2018, there were about 15,500 new households added to the city but only about 550 new businesses. Generally, the number of businesses in the city has stayed the same for years, at about 60,000.
But others are saying a shift will do very little to help the 20 per cent of those businesses that are most affected by taxes that have spiked up because of land-value changes.
The city staff report said that cluster of critical businesses would be helped more by something that a working group is already pushing for: a change to the assessment and taxing system.
“The [tax-shift] policy’s not really going to help those businesses in critical need,” Mayor Kennedy Stewart said.
He also said he thought it was unfair to hit homeowners at the last minute with another tax jump. “It’s a surprise for them.”
The shift has to be approved by the end of this month, or Tuesday, if it is going to be included in 2019 taxes.