Business in Vancouver
January 23-29, 2007
Real estate round-up by Peter Mitham
Report finds local business shouldering major municipal property tax
burden
Residential land owners paying less and using more services, according to survey conducted for Vancouver city
It’s that time of year - that’s right, property tax time. And, while some of us are wondering whether to appeal the latest assessment, there comes to hand an MMK Consulting Inc. report prepared for Vancouver’s financial planning and treasury services division.
The study follows a KPMG Consulting report prepared for the city in 1995 that showed who pays what for tax-funded municipal services such as parks, libraries and those dished out at city hall.
The earlier report was prepared when property values and concerns over the allocation of the tax burden to the various classes of properties in the city were rising.
Non-residential property owners were assessed, at the time, at a rate 5.9 times the rate of residential properties. This didn’t sit well with business owners.
But the study was a precursor to a drop in the tax ratio, which eventually bottomed out at just below 5.0 in 2001, prior to beginning a steady upward march in 2002. Today, non-residential property owners shoulder 6.1 times the assessed tax rate of residential property owners.
Groups like the Vancouver Fair Tax Coalition have long felt this to be inequitable, arguing that residential property owners are the major consumers of city services (76 per cent in 2006, MMK reports) and should bear a greater portion of municipal taxes.
The MMK study bolsters that argument, according to proponents of property tax reform who have blamed high non-residential property taxes for making it difficult for smaller, local retailers to survive in up-and-coming neighbourhoods such as South Granville and Mount Pleasant, where property values have been appreciating in the current real estate boom.
Co-ordinated in part by two of the consultants who worked on the 1995 study, the MMK report found that non-residential property owners pay $2.42 in taxes for each dollar of tax-supported services they consume. That’s up from $2.07 in 1995. The kicker? Residential property owners are still paying $0.56 for each dollar of tax-funded services consumed.
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