The Globe and Mail
Wednesday, February 7, 2007
Page: B5
Wendy Stueck and Elizabeth Church
Vancouver businesses call for a tax break
Coalition warns city that it is 'shooting itself in the foot' with
inequitable rates
VANCOUVER and TORONTO -- Commercial taxpayers in Vancouver are carrying more than their fair share of the city's tax burden and the problem is getting worse, says a new study by Toronto-based Real Property Association of
Canada, or Realpac.
That comes as no surprise to Vancouver gallery owner Deanna Geisheimer, who says double-digit property tax hikes every year since 2002 have forced her to cut staff, slash her advertising budget and otherwise scramble to make ends meet.
"I have had to take a close, hard look at absolutely everything," said Ms.
Geisheimer, owner of Art Works, a gallery on the edge of the Yaletown warehouse district amid a sea of new high-rise condominium towers.
Ms. Geisheimer, who's operated in her current location for 11 years, belongs to Vancouver's Fair Tax Coalition. The association of business groups, representing about 43,000 businesses, is lobbying city hall to overhaul its tax regime and warns that inequitable tax rates could push companies out of the city and out of business, with devastating ripple effects.
"We represent a lot of local artists," Ms. Geisheimer said. "If something happens to us, it affects a lot more than just [Art Works] and our six employees."
Yesterday afternoon, the coalition was scheduled to make a presentation to the city's Property Tax Policy Review Commission, which was set up last year to craft solutions to what has become an increasingly contentious issue.
The coalition says it is willing to pay proportionately more for city services than their residential counterparts -- just not five or six times more, and not according to a system they say discriminates against commercial ratepayers.
"Vancouver's commercial properties account for one-sixth of the total assessed property value, consume less than a third of total city services, yet pay more than half of the municipal tax burden," said Bob Laurie, a vice-president at CB Richard Ellis Ltd. in Vancouver and a member of the coalition.
The debate in Vancouver echoes one in Toronto, where steep property taxes have resulted in some businesses fleeing downtown for the more affordable suburbs. After intense lobbying from business groups, Toronto last year agreed to reduce the commercial-to-residential property tax ratio from 5:1 to 2.25:1 over 15 years.
In Vancouver, meanwhile, the ratio is 4:9 and climbing, Realpac says in its study, meaning the city will be the most costly one in Canada for corporate taxpayers this year or next.
"Vancouver is just shooting itself in the foot," said Realpac executive director Michael Brooks.
By increasing taxes on commercial properties, the city risks stifling business growth and prompting employers to consider relocating, Mr. Brooks added.
In Toronto, three new office towers planned for the downtown have taken "some of the edge" off the tax issue, said Paul Morse, senior vice-president of leasing at Cushman & Wakefield Lepage Inc. That's because the new buildings include green technology that will lower operating costs and are designed to allow tenants to make better use of space. But for companies under pressure to cut costs, the suburbs are still an attractive option, especially if they feel a downtown location is not essential, Mr. Morse said.
The Realpac study, conducted by Atlus Derbyshire consulting group, looked at the property tax rates of 20 cities across Canada, comparing how the tax burden is divided between residential and commercial buildings. For the third year running, Toronto tops the group's list as the city with the most uneven division of the tax load between homeowners and commercial landlords.
Politicians are reluctant to risk alienating residential taxpayers by re-jigging the tax system, Mr. Laurie said. But the current system in Vancouver discriminates against the very small, mom-and-pop street-level businesses, he said.
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