Business in Vancouver
October 2-8, 2007
Issue 936
Editorial
Byline: Timothy Renshaw
Tax debate sheds light on city spending
In this week’s dispatch: an early fall harvest of hard fiscal realities for a soft-at-the-centre town.
First the good news. The final report from the Vancouver Property Tax Policy Review Commission agrees with the Vancouver Fair Tax Coalition that city businesses are getting the rough end of the pineapple when it comes to property taxes.
Most of those businesses don’t need reminding that non-residential properties are hauling 55% of the tax load in the city, which is the highest in the region. Burnaby and Richmond, however, could do with a reminder, because they’re not far behind at 53% and 50%, respectively.
The song sheet from the VFTC, which deserves applause for leading the charge on the city’s tax inequity fight, also includes this refrain: residential property owners pay $0.56 for every $1 of city services they consume; businesses pay $2.42.
That’s bad for business and the city. The commission notes that continued high business property taxes could “compromise Vancouver’s ability to remain competitive within the region.”
It therefore recommended the city shift 1% of the property tax burden from residents to business annually until business instead pays 48%.
The VFTC, however, wants a user-pay rate and not some arbitrary percentage. That would require outfitting council with the means to measure service consumption accurately. That in turn would promote informed decisions on who gets charged what.
But the redistribution of taxes is only a small part of a bigger city issue: the overall tax burden.
City spending was top of mind for citizens involved in the close to 70 public delegations and written submissions considered by the commission.
“We were told,” wrote the commission, “that Vancouver’s spending is too high, and business (which bears a disproportionate share) suffers.”
The report pegged total 2006 taxes per capita in Vancouver at $812. That compares with Delta, which was next highest at $753; Burnaby ($721) and North Vancouver City ($719) in the top four. Surrey was well down the list at $385.
A 2006 MMK Consulting study comparing municipal operating expenditures also bears out citizen charges of enthusiastic spending at city hall.
It found Vancouver’s per-resident operating expenditures ($1,277) to be the highest among the four largest local municipalities compared in the study (Richmond: $1,186; Burnaby: $1,111; and Surrey: $694).
The complex calculation includes such variables as resident demand and the quality of service provided, so it’s not the last word on municipal budgeting prudence.
But the numbers confirm that efficiencies are needed.
One spinoff benefit to the city from shifting more tax to residents is that it should improve the tax system’s accountability.
As VFTC co-chairman Bob Laurie is fond of saying, businesses don’t vote at the ballot box. They vote with their feet and move to more business friendly jurisdictions or they go broke.
Residents, however, do vote. And I’d wager that most aren’t in favour of investing more of their tax dollars in inefficiently run services.
The commission’s recognition of Vancouver tax inequities is a good first step in righting the city’s budget ship.
To set it on a more cost-effective course, however, the commission’s recommendations need to be instituted.
Business will be watching council to see if it has the resolve to do the right thing.
Correction:
I erred in my September 4 – 10 column (issue 932) when I wrote that the Alaska Seafood Marketing Institute receives funding from private American foundations. The institute gets its funding from the seafood industry and public sources. •
Timothy Renshaw (trenshaw@biv.com) is the editor of Business in Vancouver. His column appears every two weeks.
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