Vancouver tax shift helps create walkable communities: Councillor Lisa Dominato
More taxes are headed the way of Vancouver homeowners. The city is giving business properties a $15.8-million tax break and transferring that onto residential payers.
The amount represents a two-percent tax shift approved by council April 29 in a close (6-5) vote.
Paul Sullivan is a partner with Burgess, Cawley, Sullivan and Associates Ltd., a commercial-real-estate appraisal company.
According to Sullivan, the shift means $40 in additional taxes in 2019 for owners of homes worth $1 million. For business properties with the same value, this means about $160 less in taxes.
“It’s four times different because the commercial tax rates are four times higher,” Sullivan explained in a phone interview with the Georgia Straight.
For Sullivan, the shift, which will be spread over three years starting in 2019, is about “fairness in taxation”. According to him, many people may not realize that business subsidizes the residential tax base in the city.
The property-tax expert noted that for every dollar of city services, residential-property owners pay only 70 cents. In contrast, business properties pay $1.88 for every dollar of services they consume.
He described the shift as “good management” of a situation wherein residential properties are growing at a rate of 28 to 1 compared to business properties. “You can imagine if you’re growing the residential base at a ratio of 28 to 1 over commercial, you’re rapidly increasing the subsidy on the commercial properties,” Sullivan said.
According to the city, the tax shift will provide relief to business-property owners.
Coun. Melissa De Genova was one of the five who voted against the shift. The others were Mayor Kennedy Stewart and councillors Christine Boyle, Colleen Hardwick, and Jean Swanson.
“That doesn’t mean that I voted against supporting small businesses,” De Genova told the Straight in a phone interview.
De Genova said there are other ways of reducing the tax burden on businesses without pitting them against homeowners. One example she cited is for the city to work with the province to modify the business-property class so multinational companies pay higher taxes. Revenues can be passed on to help local businesses.
De Genova also warned of unintended consequences, like how tenants may be affected by the shift.
In a letter to city hall, advocacy group LandlordBC reminded Mayor Stewart and council that purpose-built rental buildings are classified as residential for property-tax purposes.
“We are facing a rental housing crisis, and if this proposed tax shift were to proceed it would place further undue cost pressure on rental housing providers and contribute significantly to the affordability and supply challenges across the City,” the group’s CEO, David Hutniak, wrote.
City staff recommended against a shift, as this lowers taxes for all commercial properties, whether or not they need relief. “This means that Walmart is going to see a reduction in their tax, and residential homeowners are going to see an increase in their tax,” De Genova said.
With the shift, the residential tax share will be 55.9 percent, with the commercial slice at 44.1 percent.
Coun. Lisa Dominato voted in favour of the shift, as did Rebecca Bligh, Adriane Carr, Pete Fry, Sarah Kirby-Yung, and Michael Wiebe.
According to Dominato, it was about helping the mom-and-pop stores. “This tax shift provides that needed relief to our small-business community,” she told the Straight by phone. “Ninety-eight percent of the businesses we have in the city are actually small businesses, and so we felt it was really important to support small businesses. What I’ve heard from residents is they value their small businesses, and so, you know, that was what really informed my perspective.”
Dominato also said that the measure ties into a raft of six so-called big moves to deal with climate change approved by council at the same April 29 meeting. According to her, local independent businesses are important in the development of a walkable city, as people will not need to have a car to drive to big-box stores.
A city staff report explained that the city can reduce its greenhouse-gas emissions by 153,000 tonnes per year by making it easier for people to get to daily destinations like shops and services.
“We want to have a thriving local economy,” Dominato said. “People want to have jobs here. They want to be able to live and work here.”